Wuhan Boiler Group has won praise from the city's leaders and media - not because of its phenomenal growth in profits, but rather its remarkable resilience in the face of a credit crunch and tough operating environment. The group, among the latest batch of 33 Beijing-picked B-share listing candidates, has lifted itself since last year. An economic downturn saw group profit tumble from a peak of 15 million yuan (HK$14 million) in 1994 to three million yuan a year later. Last year, the effects of a change in strategy filtered through with profits bouncing back to seven million yuan. The success formula? New directions within its core business. Wang Yi , director of the group president's office, said: 'We have invested a huge amount of money in upgrading the technology of our equipment and developing new products. 'Now, not only can we produce large utility boilers, but also smaller industrial use boilers such as chemical recovery boilers.' The venture into smaller specialised boilers has cushioned the group from the full impact of a drop in demand for utility boilers under the tight credit policy of the past few years. Mr Wang said the new product lines had proved successful and other companies had followed suit. The lack of complementary products made in the city has put the group at a disadvantage in bidding for power plant projects. To fill the vacuum, the group has begun to co-operate with foreign firms eager for a presence in China. Foreign partners, such as Britain's Babcock International, have provided complementary products and strong financial backing, strengthening its bidding hand. They have also helped to improve the group's technology standards. 'In the past few years, while others did not have enough to feed themselves, we won lots of orders through co-operation with foreign firms,' Mr Wang said. He said the trend was to produce smaller industrial-use boilers under a more stringent environmental protection policy advocated by Beijing. The group has snapped up orders from the first batch of more than 20 paper mills along the Huai River that runs parallel to the Yangtze. There are about 200 more mills in the area and they are required to reduce waste. The group is among the healthier enterprises in the city. Many more are struggling. Last year, 45 per cent of the state-owned industrial enterprises in Wuhan were haemorrhaging, with combined losses of 600 million yuan. Wuhan Planning Commission vice-director Jiang Daci , said: 'We have a sizeable number of state-owned industrial enterprises and they are a heavy burden on us. 'These old enterprises are facing a lot of difficulties and need reforms to adapt to the transition to a market-oriented economy.' He said the situation in Wuhan was better than similar cities such as Chongqing and Shenyang where more than 50 per cent of such enterprises were in the red. State-owned industrial enterprises account for about 45 per cent of Wuhan's industrial output by value.