SIU-FUNG Ceramics Holdings says the combined income from its machinery supply business and its newly developed ceramicware production will see the group through recent difficulties in the mainland market. Vice-chairman Peter Lee Sheung-yam said that under Beijing's austerity drive, the group had become more cautious about distributing ceramic machinery and turnkey production lines to mainland manufacturers to minimise bad debts. Also with a slowdown in demand, the group has had to keep the prices of its own ceramicware low to compete with other domestic products. 'Providing better quality, our products should deserve higher prices,' he said. 'Yet it's difficult for us to raise prices now when the mainland market is making some corrections.' The group expects to see mutual support between its ceramicware production and machinery manufacturing. Siu-Fung, which began as a supplier of ceramic machinery and production lines, has developed its own ceramicware. The newly-formed Siu-Fung Concept, 65 per cent owned by the group, has 32 joint ventures to make ceramic tiles, sanitary ware and tableware in China - 16 plants are operational. 'All of these factories are using the technologies of Dubois [the machinery manufacturing arm of Siu-Fung in Germany],' Mr Lee said. 'Orders from these joint ventures have already piled up to billions. 'In return, the joint ventures can achieve a better cost control and quality improvement with the up-to-date technologies from Dubois. The move can increase their competitive advantages over other domestic products.' Siu-Fung Concept also plans to acquire an additional 10 ceramicware factories in Tangshan, Guangdong. The firm expects the auditing work to be completed before the Lunar New Year at the end of January. However, it would rather increase the production capacity of existing plants than build new factories. 'No doubt it is a matter of economies of scale,' Mr Lee said. 'Moreover, we can concentrate on improving our managerial team.' It is estimated that ceramicware production under Siu-Fung Concept will account for 50 per cent of the group's total revenue within two years. By 1996 under the expansion plan, Mr Lee has targeted a 15 per cent market share in ceramic tile production and a 10 per cent share in sanitary ware production in China.