ONE of the world's leading printed circuit board (PCB) manufacturers, locally-listed Elec & Eltek, is to sign a US$38 million property development deal with the Guangzhou mass transit authorities this week. The deal will involve developing a 2,457-square-metre site above the Huangsha underground station into 22,970 square metres of A-grade offices and shopping facilities. The development, which is a departure from Elec & Eltek's PCB core business, is one of a number of significant moves the company is making in China. Last Friday, the company opened its first PCB joint venture - Kai Ping Elec & Eltek Company - at Kai Ping in Guangdong Province. The million square feet hi-tech manufacturing plant, built in six months at a cost of $100 million, will have a production capacity of 200,000 square feet per month, increasing the company's PCB production capacity by 20 per cent. Elec & Eltek's chairman and chief managing director, David So Cheung Sing, said the move into China was ''a logical step'' for the company's future development. ''PCB manufacturing in China is not all that well developed in terms of the international market,'' he said. ''What we are doing now is talking to a number of electronics companies in Shanghai, Beijing, Chengdu and Nanjing to see if we can spin-off their PCB manufacturing capabilities to form joint-venture firms in which we have a 55 to 60 per cent majority. What we are offering in return is capital, technology and management expertise.'' Mr So said he was also looking at a possible joint venture in Hangzhou to manufacture laminated sheets for PCBs. The company recently formed a joint venture with the Beijing Science & Technology Cooperation Centre in Hongkong. Called Chitech, the company will develop mass-market products for China. Founded in 1972 and listed in 1984, Elec & Eltek has become one of the world's leading PCB manufacturers and the first in Hongkong to mass-produce double-sided PCBs for commercial use. Since its formation, Elec & Eltek has prided itself in providing high-quality PCBs to computer, computer peripherals, telecommunications products and vehicle accessories manufacturers world-wide. The international PCB market last year was worth an estimated US$140 billion. At present, Elec & Eltek's share of that market is about 0.5 per cent, but the company hopes to capture one per cent of the market in two to three years. The company, which has manufacturing plants in Hongkong and Thailand, has a total floor capacity of 500,000 sq ft and will see that increase by another 100,000 sq ft when its Kai Ping plant becomes fully operational early next year. Since 1991 Elec & Eltek has phased out the assembling and testing of all its original equipment manufacturing (OEM) operations and subcontracted its loss-making facsimile operations to Shenzhen and Guangdong. Problems with OEM and facsimile production was reflected in the company's 1991 financial results, which saw profit after taxation fall to $700,000. Last financial year, profit after taxation was a healthy $72.4 million. Mr So said: ''A number of factors contributed to our locating our plant in Kai Ping. The fact that our deputy chairman and managing director Wilson Tam Kam Ho is from the area was one reason, but there were others. ''Cost was one very important factor and the other was the tremendous help and support given to us by the local authorities.'' Group controller Canice Chung said the land cost alone was 100 per cent lower than in Shenzhen, which had been earmarked back in 1987 to be the site of the company's first move into China. ''Another factor was the cost of construction - 50 per cent cheaper than Shenzhen - and the cost of labour,'' he said. ''Our workers earn 400-500 renminbi a month compared to an average of 1,200 RMB we would have been paying in Shenzhen.'' Mr So added that the local authorities, which have invested over US$1 billion in infrastructure projects, provided a number of ''extremely good'' incentives, including a tax holiday for the first three years of operation''. Mr So anticipated that some 30 per cent of the Kai Ping operations would be for the domestic market and 70 per cent for export. ''China, I believe, is where the future is and we intend to be part of that future,'' Mr So said.