PEACE Mark (Holdings) is expected to launch a public offering next month to raise funds for expansion in China. Chairman Patrick Chau said the watchmaker was setting up a joint venture plant in Kunming, Yunnan province, as the first step to penetrate the domestic market in China. Peace Mark would take a 51 per cent stake, while the Chinese partner, Kunming Hongyun Machinery Plant, would own the rest, he said. He estimated that his group would have to invest initially about $4 million for its interest in the project. Kunming Hongyun Machinery is under Aerospace Industry Co in Yunnan, which has strong technology support due to its military background. The new plant is expected to be within the boundary of Aerospace Industry Co's facilities, which include two plants to make refrigerators and mini-buses. Mr Chau said the Kunming plant would produce watches aimed at the mass market in China. He projected that the plant would be able to produce one million watches a year. Up to 30 per cent would be sold in China through retail and distribution outlets or subsidiaries of Aerospace Industry, he said. The proximity of Yunnan to Vietnam, Cambodia and Laos would enable Peace Mark to sell its products through border trade to these neighbouring countries, he said. Peace Mark is also establishing a sales and marketing office in Guangzhou. In Shenzhen, the group operates production plants in Nantou and Xixiang, totalling about 20,000 square feet of space, with a capacity to produce 2.5 million watches a year. Mr Chau said the company had bought a 200,000 sq ft site in Xixiang for about $4 million to consolidate its production facilities under one roof. He said it planned to build on the site in two years' time, investing about $20 million, excluding land premium. Peace Mark was established in 1983 and is principally engaged in the design, assembly and sale of watches and clocks. The group's products are exported to more than 20 countries in North America, Latin America, Europe and the Asia-Pacific region. Geographically, the United States accounts for about 50 per cent of sales, while Britain accounts for about 12 per cent. For the year ended March 31, 1992, the company reported a profit of about $19 million on a turnover of about $180 million. The company has a shop in Causeway Bay, and it intends to set up showcases in chain stores. It is also considering setting up in countries such as Singapore, Malaysia, Thailand, Japan, South Korea and Vietnam.