THE Kerry Group, controlled by Malaysian businessman Robert Kuok, is to sign a letter of intent to build a US$100 million Shangri-La Hotel in Harbin, Chinese authorities say. Harbin vice-mayor Zhu Shengwen said yesterday in Shenzhen that the Shangri-La would be the Heilongjiang provincial capital's first five-star hotel. Although the project needed final approval from the central government, the Kerry Group and the Harbin No 1 Development Corp were to sign a letter of intent at Harbin's trade fair in Shenzhen this week. The Kerry Group, controlled by South China Morning Post (Holdings) chairman Mr Kuok, was to hold a 90 per cent stake in the new hotel. Harbin Foreign Investment Administration Bureau director Yang Yidian said the Chinese partner would own the remainder. The Kerry Group holds stakes in both Shangri-La International, a hotel management company, and Hong Kong-listed Shangri-La Asia. Initially, US$80 million would be invested in the hotel, which would occupy 15,300 square metres along the Songhuajiang River in Harbin and have more than 300 rooms, Mr Yang said. Another $20 million would be invested in phase two, expanding the hotel to about 27 floors and almost 600 rooms. Shangri-La officials refused to comment on the project, which has not been officially announced. Mr Yang said Harbin, famous for its annual Ice Lantern Festival, hoped to have the first phase of the hotel completed by 1998, when the city would host a conference for mayors of the world's northern hemisphere cities. In Shangri-La Asia's 1994 annual report, chairman Liu Tai-fung said the company had ruled out a hotel in Harbin because it had not identified a suitable site. Harbin officials said a different company was to build a five-star hotel in the city, but fund-raising difficulties saw the project being handed over to the Kerry Group. Shangri-La Asia has invested in hotels in Beijing, Shanghai, Xian, Shenzhen, Hangzhou and other Chinese cities. Net profits from Shangri-La's hotels in China rose 11 per cent during the first half of the year over the same period last year, lending support to the company's 26.8 per cent overall profit growth. Shangri-La Asia said in last year's annual report that it expected to open a 17-storey hotel in Beihai, a coastal city in the Guangxi Autonomous Region, in December. It also planned to open a hotel in Jilin province's Changchun, and a traders' hotel in Liaoning province's Shenyang, in the middle of next year.