Jebsen Beijing curbs won't hamper trade

Carrie Lee

CHINA trade will continue to grow despite Beijing's policy of curbing economic overheating, predicts a major Hongkong trading house.

''The worst thing in China has always been inflation and unemployment. More stability [resulting from control of inflation] will lead to better prospects,'' said Jebsen and Co managing director Hans Jebsen.

The 97-year-old Hongkong-based company, which trades a variety of goods including Pentax cameras, Volvo and Porsche cars, chemicals and medical equipment, is now looking at the mainland for expansion.

Mr Jebsen said the move was inspired by concern over growth in the Hongkong market which was saturated in sectors such as photographic goods.

He said sales of luxury products in the territory would depend heavily on tourism, which traders could not control.

Given the disappointing retail performance last Christmas, Mr Jebsen said: ''I do not believe that one can expect a very high growth rate of consumer products in Hongkong. So growth has to come from China.'' Last year, the group's China business grew 36 per cent to $2.6 billion, making up half of its total turnover, while its Hongkong trade saw only single-digit improvement.

With that in mind, Jebsen and Co has decided to expand operations on the mainland, though profit margins would be lower due to higher overheads.

One of the problems was the lack of economies of scale in the relatively undeveloped market, said Mr Jebsen.

But he warned that a long-term vision was needed for venturing into the potential source of wealth.

''China is not a hit and run market,'' he said.

He believed their were good times ahead for the economy which had gone through a bad patch.

In a move to facilitate its China projects, Jebsen and Co has applied for the right to unlevied trade in the Pudong district of Shanghai.

Mr Jebsen said he was confident of being granted such a licence, which had recently been granted to a number of foreign trading firms including Inchcape.

''Our aim is to be in all provinces in China with at least one office as soon as we find enough business to justify it,'' he said - expecting to realise the aim by 1997.

The differences in prosperity among provinces was a problem for traders who could not sell equally well in all places, he added.

But he also noted that the disparity was dwindling with foreign investment flowing into poorer areas.

Mr Jebsen said the company would increase activity in its mainland offices in a bid to make them independent entities.

''Our experience shows that to do business in China can be very rewarding, but you have to be there,'' he said, adding that control from Hongkong would not be efficient.

The company aimed to run the same level of service and facilities on the mainland as it has in Hongkong, including setting up offices, warehouses and service centres.

It has invested in a chemical mixing plant in Shenzhen which is due to start production in the first half of this year.

Jebsen and Co has moved its Hongkong headquarters into Causeway Bay's Caroline Centre - a building of which the company owns 10 per cent.