IN 1980, Jerome Sze Chin-hung had a dream of building the largest bicycle factory in the world and changing the West's conception of China as a mass producer of low-tech, base quality products. In pouring rain, he drove Stephen Codron across the border from Hong Kong to a site that was on offer. The unfinished roads were flooded. Water came streaming down the red clay landscape, engulfing the car in three feet of golden sludge. After being hoisted back on to firm land by a British-built bulldozer, the pair arrived at what was to be the site of their first factory. Mr Sze confidently declared they would build the best bicycle factory in the world there - a bold statement, considering that 13 years ago, Shenzhen had a population of less than 50,000 and no concrete roads, poor electricity supply and hopeless telecommunications. In 1984, China Bicycles Co (CBC) was formed as a 50-50 Chinese-foreign joint venture between Mr Sze's Hong Kong (Link) Bicycles and state-owned Shenzhen Municipal Light Industrial Co, with independent legal status. The company envisaged reaching annual production of half a million bicycles after five years, but beat the goal in its third year with 637,000 bicycles made. In July 1987, US bicycle manufacturer Schwinn Bicycle Co came on board, buying a 33.3 per cent stake in the company from CBC's two founder partners. Schwinn was based in California, the fashionable mountain-bike capital of the world. CBC later bought its brand name - Diamond Back. The company was renamed Shenzhen China Bicycles Co Holdings (SCBC) in November 1991. In March the following year, A and B shares in the company were officially listed and traded on the Shenzhen stock exchange. The offerings raised about 123 million yuan (about HK$164 million at the official rate) and HK$145 million for SCBC, respectively. Its B shares closed up 243 per cent on their first day of trade. However, of late they have been underperforming Shenzhen's lacklustre index by about five per cent. When Schwinn went bankrupt in February this year, owing SCBC about US$70 million, the group made a 50 million yuan windfall profit by selling Schwinn's A shares, accepted in lieu of debt, to institutional investors. SCBC's pre-rights issue shareholders are Hong Kong (Link) Bicycles with 23.3 per cent, Shenzhen Municipal Light Industrial, 23.3 per cent, and Stephen & Partners (a trusteeship for Mr Codron), 4.9 per cent, with the other A and B shares in public and institutional hands. Mr Sze is its director and general manager.