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Carrie Lee

WAH Kwong Shipping, New World Development and Henderson Land plan a US$200 million commercial development in Shanghai, apparently undaunted by China's austerity plan.

  The shipping company's mainland properties could even benefit from China's credit tightening, said Wah Kwong managing director George Chao Sze-kwong.

  But he conceded that the economic slowdown could hit its shipping business.

  ''China's credit tightening is virtually good for our property business,'' Mr Chao said after the group's annual meeting yesterday.

  ''There are many small companies which do not have enough money for property projects but sign development deals for speculation [with the intention of selling the land when prices go up],'' he said.

  ''The new measures can rid the market of them and reduce the number of our competitors. Thus it is a good chance for us.''   The Shanghai project comprises a shopping mall with hotels or offices, giving a total floor area of one million square feet.

  Details of the development and equity distribution had yet to be finalised, although Mr Chao said Wah Kwong would take a stake of less than 50 per cent.

  The district government would also take a symbolic stake of about one to two per cent, he said.

  The parties aimed to sign the contract by the end of the year. Mr Chao expected demolition of the structures on the site to take a year.

  Wah Kwong was planning a similar project in another district in Shanghai with other parties, but a contract had yet to be signed.

   The group's 65 per cent-held commercial complex in Wuxi and 70 per cent-held residential-commercial development in Shanghai would be completed by the end of next year, he said. Pre-sales would start by the end of this year.

  Property business, which accounted for 20 per cent of group turnover, was part of the firm's diversification.

  ''We aim to increase the weighting of other kinds of investment because returns from the shipping business have been low in the past 10 years,'' said Mr Chao.

  ''Now the shipping market is quiet. China's economic slowdown may reduce the amount of steel imports and hit the shipping industry,'' he said.

  But the shipping business - which now makes up 80 per cent of group turnover - would not be cut below 50 to 60 per cent in the long run.

  ''Long-term prospects depend on the global economy. Now that the US and Europe are recovering, the outlook for 1994 shouldn't be bad. It will keep on improving in 1995,'' he said.

  However, even that would not bring the industry back to the level of demand in the 1970s, he said.

  The group would buy a noodle maker in Fujian in August or September for ''a few million US dollars'', said Mr Chao.



Shipping firm takes Shanghai property role