Panda Electronics Group is in merger talks on what could become China's fourth-largest consumer electronics firm, with targeted annual sales of more than 50 billion yuan (about HK$46.8 billion) by 2005. The move is part of accelerating industry consolidation, driven by looming foreign competition now that China has joined the World Trade Organisation. H-share Nanjing Panda Electronics, the Hong Kong-listed arm of Panda Electronics, has confirmed that its parent is in talks with eight mainland consumer electronics makers and information technology (IT) firms to form an industry giant. The merger was initiated by the Jiangsu provincial government, said one of the possible partners in the deal, with the apparent aim of helping small and scattered home-grown firms achieve efficiency and economy of scale. Core Pacific Yamaichi International head of research Alex Tang said mergers and acquisitions were a necessary step if mainland companies wanted to compete with foreign players. 'Many industries in China have undergone some kind of restructuring over the past decade. But the accession to the WTO [at the end of last year] helped to accelerate the trend of consolidation,' Mr Tang said. The proposed new entity would have a registered capital of 3.5 billion yuan, and a business scope spanning software development, home appliances and telecommunications equipment manufacturing, according to a Panda Electronics official. According to statistics from the Ministry of Information Industry, China Putian Group had the highest revenue of China's electronics products makers last year, followed by Haier Group, Legend Group and Shanghai Broadcast & TV Group. Panda Electronic ranked fifth with 21.2 billion yuan, reported one mainland financial news Web site. The Panda Electronics merger move is the latest government endeavour to shake up China's state-owned industries, as it tries to help them survive in highly competitive markets such as consumer electronics and IT products. Global industry players, notably from Japan, have been trying to boost sales to the mainland through partnerships with some of China's industry leaders such as Haier Group and TCL Holdings. Nanjing Panda Electronic's share price has risen 7 per cent since Monday to close at HK$2.30 yesterday on news of the proposed merger. Jiangsu is the second province known to be working on a province-wide industry merger. It follows Zhejiang's move to group the scattered business interests of the provincial government into larger single entities in about 20 industries. Other nationwide industry mergers have been taking place or are planned in aviation, telecoms, power generation and the rare earth industry. An official from Nanjing Panda Electronics said that the proposed merger partners included Huafei Colour Display System, Jiangsu Software Park, Nanjing Machinery & Electronics Industrial (Group), Nanjing Xingang High-tech, and Zhengjiang Jiangkui Group.