As China moves to upgrade its electronics industry, it has sited its first vacuum fluorescent display (VFD) manufacturing base in Shaoxing. Zhejiang Vacuum Electron Co is so far the country's only VFD plant. The Shaoxing city government won the support of the Ministry of Electronics over the company's competitors in Shanghai and Changsha. VFD, compared with liquid crystal display, is a radiating display and has higher clarity and longer life. At present, VFD has a wide range of applications, including in sound systems, office automation equipment, household electrical appliances and measuring instruments. Company general manager Sun Jiping said: 'China used to rely on VFD imports to satisfy demand. With our factory in operation, our products will replace some imports.' He reckoned that China required about 10 million VFDs a year and this would grow at an annual clip between 10 and 15 per cent. The company can make three million VFDs a year. Adopting VFD technology from Japan's NEC, Zhejiang Vacuum, with total investment of 150 million yuan (about HK$139.5 million), began operation in May 1995. Mr Sun said the plant was effectively a development from a former electronics factory in Shaoxing, which made VFDs on a very small scale. With the backing of the city government, Shaoxing's three state-owned enterprises dipped into their pockets to fund part of the investment. Mr Sun said VFD manufacturing was a pivotal project to China in a programme to localise production of components for domestically-made video recorders. The establishment of the VFD factory underscored the Ministry of Electronics' determination to upgrade the sector's technology, he said. It was also in line with Shaoxing's plan to adjust an industrial structure at present geared towards the textile sector, which contributes half of the city's industrial output. Mr Sun said the company planned to double annual production capacity to six million with an output value of 300 million yuan by 2000. This second-phase expansion project would cost 200 million yuan. The company was seeking a joint venture with NEC and it was also in talks with Korea's Samsung. 'It will be good to co-operate with NEC because the Japanese firm has the capital, the market and the technology and our risk will be lower,' Mr Sun said. Last year it made sales of 45 million yuan with one-third of production. This year, it expects to generate total sales of about 130 million yuan with full production.