Export revenue reported by Hong Kong-listed Euro-Asia Agricultural (Holdings) in the past few years was grossly exaggerated, official statistics suggest. Internal company documents have also shattered the Shenyang-based agricultural firm's portrayal of itself as a major domestic supplier of orchid seedlings on the leading edge of technology. In its IPO prospectus, Euro-Asia claimed export revenue of 426.43 million yuan (about HK$404.52 million) in 2000 alone, when it relied solely on the sale of seedlings and flowers for revenue. But official statistics show China as a whole exported just US$28 million worth of floricultural products in 2000, or 54 per cent of Euro-Asia's figure. Euro-Asia booked export revenue of 633.5 million yuan in its annual report last year, when the expansion into vegetable cultivation reduced the contribution of seedlings and flowers to 90.5 per cent of its gross turnover. Assuming Euro-Asia exported all of its vegetables, the firm would have sold 529.49 million yuan worth of floricultural products overseas, or 80 per cent of China's total exports of just over US$80 million. Thanks to soaring revenue and a fat profit margin, Euro-Asia's share price rose 89.1 per cent over its initial public offering (IPO) price of HK$1.48 in the first 10 months after it listed on the main board in July last year. But it is under investigation by the mainland and Hong Kong share-market regulators for possibly inflating its revenue by 20 times in the four years between 1998 and last year. The firm's chairman Yang Bin, reputedly China's second-richest man, has been placed under house arrest for tax evasion and other illegal business activities. Exports, contributing 64 per cent and 58 per cent of the firm's revenue in the past two years, are a key piece of the puzzle. Euro-Asia derived 93 per cent and 72 per cent of its overall revenue from the sale of Phalaenopsis and Cymbidium, two strains of orchid, in 2000 and last year. Many strains of orchid, including all Phalaenopsis and 16 species of Cymbidium, are deemed endangered species protected by an international convention, whose import and export require Beijing's clearance. Beijing's influential Caijing magazine published Shenyang official statistics indicating Euro-Asia had shipped no orchids overseas in 1999 and 2000, and exported only US$131,000 worth last year. Caijing also cited Shenyang customs office data showing Euro-Asia exported less than US$300,000 of goods between January and August, against 484.9 million yuan claimed in its interim report. Accompanied by the photo of a weed-strewn Shenyang greenhouse, the story accused Euro-Asia of exaggerating its production acreage. Euro-Asia's Hong Kong office has said it cannot access financial records at the Shenyang headquarters. Two recent Euro-Asia internal reports obtained by the South China Morning Post also raise serious doubts about the quality of Euro-Asia's products. One September 6 report, believed to be penned by the firm's domestic sales staff, described the firm's entire inventory of test-tube Phalaenopsis seedlings as old species that would be hard to sell. 'They basically cannot compete with new species domestically,' it said. Internal investigators noted high mutation rates. Some customers had complained about the low survival rate and slow growth of Euro-Asia's seedlings. The firm's inventory of the Cymbidium strain of orchid faced the same quality problem, plus domestic price competition. 'We propose halting production of the current species and introducing competitive new ones,' the report said. Another report dated August 12 faults the test-tube seedling production team for chaotic management and gross inefficiency. Euro-Asia is said to be working on rescue plans in Hong Kong, to avoid immediate liquidation requests from two creditors, Hamburgische Landesbank and Chiyu Banking Corporation under the Bank of China Group, over the repayment of credit facilities totalling HK$60 million.