Demand for escalators in China is increasing rapidly because of the property boom but industry players face challenges ranging from fierce bidding for contracts to payment problems. Li Zhendong , Vice-Minister of the Ministry of Construction, said: 'About 40,000 units are in demand and this is growing 10 per cent year-on-year. We are the third-largest market for escalators in the world, but by 2000 we will be the largest.' Beijing-based economist Zhang Xiaoxuan said small to medium-sized apartment buildings were expected to spring up in the next few years due to the government's promotion of small-scale towns. 'This will particularly fuel demand for residential-use escalators,' Mr Zhang said. Ren Tianxiao, executive president of China Elevator Association - a semi-Government body linked closely to the Ministry of Construction - said about 130 companies were permitted to make escalators and elevators, of which about 20 were financed with foreign-capital. They included Swiss-based Schindler Holdings, Japan-based Mitsubishi, United States-based Otis Elevator Co, Finland-based Kone Elevators and Japan-based Toshiba. William Wong Wing-lam, director and general manager of Kone China, said: 'It's not an easy job. Apart from cultivating guanxi [relations] with local municipal governments, arousing awareness of brand names is also important. 'We have some substantial projects in Shanghai making little profits or even losses. But these projects are city landmarks and will benefit Kone's brand name in the long run.' Mr Wong said the installation of 100 escalators in Golden Camomile Plaza, an office and hotel building developed by the Agricultural Bank, would lose about 2 per cent of the US$5 million contract value. Price-cutting and longer payment terms for customers were some of the strategies Kone used to win contracts, Mr Wong said. This raised bad-debt risks, so Kone had to scrutinise the financial background of clients, both private and Government-backed.