Van Shung Chong now has 50 per cent of its investments in China and is planning to build more coil centres there.

Mr Yao said Hong Kong had advantages in marketing, finance, logistics, management and inventory that China was not so good at.

SAR companies should look at how to add value to China.

Mr Yao said he would shift the company's focus from Hong Kong to China by 'active investment', with heavy emphasis on human resource development besides adding to investments.

'Work there, understand there and invest there, and then you will be successful,' he said.

Mr Yao anticipated there would be keen competition among overseas and Hong Kong companies as China entered the World Trade Organisation, providing a good opportunity for developing business.

'We only have six to nine months to establish our sphere of influence before Western companies join in,' he said.

He hinted that Van Shung Chong would act fast and provide value-added services in China.

It would focus on technological improvement to lift service quality, but Mr Yao also stressed the importance of re-organising the work process.

'We hired an American-based consultancy to break our company structure into parts and carefully look into the problems inside,' he said.

Van Shung Chong has spent about HK$10 million in its re-engineering programme to improve efficiency.

Mr Yao said iSteelAsia.com had cut its burn rate by 40 per cent in the second quarter and the online revenue increased 50 per cent.

Van Shung Chong says it now has a 19 per cent stake in iSteelAsia.com, a business-to-business online steel-trading platform listed on the Growth Enterprises Market in April.