Conflicts between two camps in the container-manufacturing industry are likely to block any benefits the sector might have enjoyed from the mainland's World Trade Organisation entry, according to industry sources. One group wants monthly production quotas for each factory, meaning a plant could not easily reduce unit costs. The other group supports fixed prices for containers produced, meaning a factory could reduce its unit costs by selling more boxes. A source said the mainland would not be moving towards free trade in the container industry, while the two groups 'continue to squabble over this matter'. The industry's problems have been exacerbated during the past few years because of over-capacity and over-purchasing by the leasing sector from 1995 to 1996. As a result, prices were pushed down from the US$2,000 per teu (20-foot equivalent unit) measure level three to four years ago, to $1,900 per box in 1996 to $1,800 in 1997, and continued to fall to $1,400 in 1998. Presently, dry freight containers are being manufactured for about $1,470-$1,480 per teu in southern China, $1,450 per teu in central China and $1,420 in northern China, the sources said. On average, manufacturing costs of a 20-foot container was about $1,450. Despite receiving subsidies and other support from Beijing, only 25 of 40 container manufacturers in the mainland are said to be still in regular production. This is because they cannot get enough new orders due to the fierce competition. In late 1997, Beijing announced it would crack down on errant container manufacturers who flaunted rules laid down by the government to regulate the ailing industry. The Ministry of Foreign Trade and Economic Co-operation and customs officials were empowered to check manufacturers' invoices and contracts to ensure the rules were followed. However, these measures have apparently failed, and container manufacturers are still continuing to produce containers way under production costs in some cases. Singamas Container Holdings chief executive Teo Siong Seng said: 'Nothing has moved since the price control measures were announced.' But some container manufacturers such as China International Marine Containers and Singamas, through cost cutting and strict control on overheads, have continued despite the low profit margins. Mr Teo said Singamas was able to pull through by increasing production levels. In the second half of last year, its Shanghai Pacific International Container, the largest single production line factory in the world, restarted its second shift production line. The company was forced to produce more and spread overheads to survive. Singamas, which has orders in hand until April, is cautious about the future. Mr Teo declined to speculate about this year's business, saying that orders had been pretty steady so far. SHIPPING