HUHHOT Malleable Cast Iron Industry Co is getting to grips with the ups and downs of being a township enterprise, reflected in last year's change to car assembly production from its core business of making iron pipes. 'The main attraction of a township enterprise is its flexibility. It can manufacture whatever the market needs,' company official Meng Jindong said. But the switch has not been without snags because the company's car production forecast appears too optimistic. Of the 30 sedans made since production began last year, more than half were unsold and the company has put on hold this year's target to make 50 family cars. 'To most families, a family car is still out of the reach at 50,000 yuan (HK$46,440) each,' he said. Deputy general manager Sheng Wen said: 'We went for the diversification because we want to achieve a breakthrough in business.' Also prompting the company's diversification was the government policy of encouraging family car production. 'With the government calling for a wider application of family cars, we aim to produce cars that are affordable by the general public,' he said. The sedans' 50,000 yuan cost compares favourably with the 170,000 yuan for a Santana, jointly made by Shanghai Automotive Industry and Volkswagen of Germany and China's most sought-after saloon. In addition, diversification was encouraged by an Inner Mongolian government stipulation. 'The Inner Mongolian government said it would allow only one assembly plant to make family cars,' said Mr Sheng. 'So we believe we are the only manufacturer and will be able to make good money.' Undaunted by its setback, Huhhot Malleable Cast Iron Industry Co is continuing with its core business of making iron pipes for the time being. Again, its flexibility of being a township enterprise, an industrial concern in a rural area with start-up capital from local farmers, allows it to alter production mix fairly quickly and easily. Mr Meng said about 95 per cent of the 900-plus workers at the factory were recruited off the land. 'Now they can earn up to 4,000 yuan a year, doubling their salary when they were farmers previously,' he said. The company made a net profit of 3.71 million yuan last year. Last year, Huhhot Malleable Cast Iron Industry Co had profits of 3.71 million yuan with sales of 48.73 million yuan. But despite the flexibility they enjoy, Mr Meng said township enterprises would lose some of their competitive edge following China's reform of state enterprises. 'China's state-owned enterprises have been undergoing transformation to become more responsive to the market. Township enterprises will no longer have an advantage over state ones,' he said.