Shares in Jingwei Textile Machinery Co tumbled 12.8 per cent yesterday after the mainland firm revealed sales would drop by 200 million yuan (about HK$186 million) this year under Beijing's policy of suppressing demand for spindles. The H-share company ended 10 cents down to 68 cents, while the Hang Seng China Enterprises Index, which tracks the performance of H shares, edged down only 4.72 points to 674.37. Jingwei, the mainland's largest textile machinery-maker, estimated that it would reduce supply of 1,500 units of cotton spinning frames to domestic buyers this year, which would hurt its sales by 200 million yuan. According to the original forecast by Credit Lyonnais Securities Asia, Jingwei would have sales of 630 million yuan this year. The cut means a reduction of about one-third of the company's sales. 'The company will benefit from the textile sector reform in two to three years, when the textile industry is back on growth track, despite the short-term pain,' a Jingwei official said. Under the policy, 10 million obsolete spindles, compared with existing 42 million, will be disposed of by 2000, in a bid to rectify the sector's loss-making situation. Permits must be required for the production and purchase of cotton spinning frames and Jingwei has ceased the supply of products to domestic customers since December. 'We used to sell 2,000 units a year. With the policy, we expect to sell only 500 now,' the official said. He said Jingwei planned to boost exports to compensate for the shortfall. Exports accounted for about 10 per cent of sales, he said. However, analysts are sceptical of of this, saying it takes time to establish in the overseas market and that Jingwei's products are low-end.