THE small building on Kennedy Road facing on to Garden Road does not look like a hotbed of creative activity. If you were looking for a clue, the giant plastic cactus in the front porch might give it away. But this is the home of Schtung Records, the first Asian label to sign a worldwide distribution deal with MCA Music Entertainment. You could call it Asian fusion, pan-Asian hip, but the first release from Schtung - Spirit House by Celestial - is best described as an Asian enigma. Chinese, Nepalese, Irish and Vietnamese folk melodies strung to a digital synthesised beat; zheng and erhu leading an infectious groove which will hit the shops on April 1. And there is more to come from this group of 12 composers - with staff in Hong Kong and Singapore offices - which make up Schtung Records. Five further albums will be released this year, including atmospheric jazz from Dave Packer, traditional works from a Kathmandu trio called Sur Sudha, a Singapore dance collaboration entitled Jam Bangle, Malay-tinged LA funk from Alabama-born Joe White and a release from an American composer called Mashor. It all began with Joyce Ma and her sister, Bonnie Gokson, who commissioned Schtung, then primarily a producer of advertising soundtracks, to write the music for a Joyce CD to celebrate the opening of the Galleria store. Schtung, already looking like 'a private club for disorientated musicians and composers' according to managing director and co-founder Morton Wilson, sent six composers off to write tracks to reflect a mixture of East and West, a merging of sounds and textures. That was in early 1992. 'When we put the tracks together, it felt like an album even though we'd been working separately,' says Wilson. 'It was painless. We decided to pursue it.' Only 15,000 copies of the Joyce CD were produced, but the composers were inspired. Schtung Records spent the intervening four years speaking to record companies without success until MCA launched its Asian operation in the middle of last year. The deal with MCA is structured like a joint venture, says Wilson. Schtung pays for the recording of the album to the point of release then MCA takes over the international distribution. 'We're both taking risks, but they don't involve a huge outlay,' says Wilson. With four studios in Hong Kong, three in Singapore and one in Los Angeles, Schtung quickly got to work on potential album releases after the Joyce inspiration. Spirit House was actually completed two years ago, much to composer-producer Peter Millward's frustration. 'I've only started telling people about it again in the last month,' he says. 'It was a classic case of the boy who cried wolf.' Four albums were finished in the last year, with three further releases near completion. Now they can finally be heard. The deal with MCA is not tied to numbers, says Wilson: 'It's open-ended and there's a term on it; we'll review the deal at a certain point but there's no arrangement for a particular number of albums.' Schtung Records has been active in Hong Kong since 1982, when co-founders and former New Zealand schoolfriends Wilson and Andrew Hagen came to the territory in search of film soundtrack work. 'The film side was not as exciting as we'd hoped, but we found terrific work in advertising,' explains Wilson. Schtung won awards from Cannes, New York (the Clios), London and Hong Kong industry awards including the music for best commercial for three years. They took over the lease on the Kennedy Road building in 1987, and by 1989 their roster had expanded to include composers Packer and Eddie Chung. Singapore opened in 1992, and Schtung was already well on the way to discovering a pan-Asian beat. Celestial, a loose Hong Kong-based group driven by Millward, began to find it in Spirit House. 'I don't like to call it an Asian enigma, though that does convey a certain message,' says Millward. 'But there's a lot more to it than that.' Bound to catch on in the clubs, Spirit House features Hsin Hsiao-hung on erhu (Chinese violin); she's the principal player with the Hong Kong Chinese Orchestra. Sur Sudha, a trio from Nepal, contribute sitar, flute and tabla. Packer plays harmonica, with Eugene Pao on jazz guitar. It's a collage of different styles, with 1970s funk grooves lurking beneath a 30s Shanghai tunes that move into Kathmandu raga. 'One of the first Chinese sounds I really liked was the erhu,' explains Millward, who came to Hong Kong from London's dance scene in 1990. 'And I was thinking of a simple melody, with a hypnotic spacey rhythm behind it - that was the starting point for the whole album.' It may also be the point of departure for a new trend, as Millward is already working on Celestial's second release which will feature more Japanese influences. Schtung is aiming at the world with this pan-Asian synthesis. It believes the US, and in particular Europe, will respond to its 'melting pot' releases. 'The most important thing is that this record company, this deal, comes from Asia and therefore there's no point in doing anything that doesn't sound that way,' says Millward.