PAM and Frank International Holdings signed an agreement yesterday with Time Warner Sports Merchandising to manufacture and distribute sports products under the World Cup '94 label in China. Under the agreement, Pam and Frank will manufacture a broad range of goods, including bags and collectable items such as key chains, stuffed soccer balls and PVC portfolios. The group's preliminary estimate of the operating turnover for the 18-month contract - from June 1993 to December 1994 - is between US$5 million and $8 million. ''And if the Chinese football team made the finals of the competition, the potential then would be tremendous,'' said the group's executive director, Paul Rivers. He said China was a virgin market and there was demand from the top 10 per cent of the population for Western branded sport products. ''Going into the market with the World Cup is an ideal entrance strategy for sport merchandise licensing and we are very proud to be blazing the trail,'' he said. The group has agreements with five Chinese organisations in Wuhan, Shenyang, Jiangsu, Hunan and Guangdong to distribute its products in northern, southern central, and eastern China. It also has five factories in China as well as a new industrial site being developed in Baoan, which will add a further 180,000 square feet of industrial space to the group. The group sells direct to retail stores in Chinese cities. The group plans to launch a series of World Cup theme products in June when qualifying games are played in Chengdu, Sichuan. Time Warner Sports is the exclusive worldwide agent for the licensing and merchandising of World Cup '94. Time Warner's general manager of international marketing, Mr Paul Epner, said this was the first time a major international sport merchandising agreement had been signed for the Chinese domestic market. The agreement with Pam and Frank was arranged through Plaything Merchandising Co, which has been appointed by Time Warner as its official licensing and merchandising agent for World Cup '94 for Hongkong, China, Taiwan, the Philippines, Indonesia, Singapore, Malaysia and Thailand.