WHEN residents of Huang village in Dongguan, Guangdong province, began their collectively-owned business in 1988, they had 320 acres of barren land, which was good for nothing except for growing sugar cane and burying the dead. To start off they had to borrow some US$10 million from Hong Kong's Ka Wah Bank, with the Dongguan Municipal Foreign Economic Commission acting as guarantor. In return, the government agency was given a stake in the enterprise. Five years on, the collectively-owned enterprise has become a conglomerate with assets of 1.34 billion yuan (about HK$1.79 billion at the official rate), owns three industrial districts and has interests in 33 manufacturing plants employing 15,000 workers. ''We have built up our business empire from virtually nothing,'' said Chen Jianzhi, vice-president of Winnerway Industries (Holdings). The story of Winnerway is typical of China's more than 20 million township enterprises which proliferated in the past decade as a complement to the predominant state-owned sector. ''Unlike the state-owned enterprises, which are subject to many constraints on their growth, we have the full autonomy to develop our own business,'' said Mr Chen. Last year, township enterprises registered a gross output of 1.76 trillion yuan, accounting for 31.6 per cent of the country's total industrial output. This year, the output of township enterprises, which employ 112 million people in the rural areas, is expected to reach 2.7 trillion yuan, up more than 50 per cent on last year. While the state-owned enterprises were hit by the Government's credit crunch policy earlier this year, the township enterprise sector continued to boom. ''It is inevitable that the macro control has some impact on us, but the extent of the impact on township enterprises is different from that on state-owned enterprises because from the very beginning we had to rely on our own to seek funds for investment, by borrowing or by accumulation of profits,'' said Mr Chen. Indeed, the success of Winnerway owed much to its ability to capitalise on the development of Dongguan as a major manufacturing base in the Pearl River delta. The city is home to more than 2,000 Sino-foreign joint ventures and 6,000 processing plants. It is estimated that more than 700,000 workers from other provinces are working in the city. So when Huang village started its own business, it made the right decision to turn the 320 acres of land into the Winnerway Industrial District. ''From here, we just snowballed,'' said Mr Chen. The Winnerway Industrial District was modelled on the Shekou Industrial Zone in Shenzhen in which foreign investments for material processing were initially encouraged. Then there were joint ventures and finally, the group set up its own factory after itfelt it had learnt enough. A special feature of the industrial district was that supporting facilities, including water and power supplies, restaurants, accommodation, entertainment, postal and banking services, were all sufficient in the district. ''It is like a small community. The turnover rate of workers ranked the lowest in the Pearl River delta,'' Mr Chen said. The group's Enterprises Division went so far as to help manufacturers to recruit workers so they could concentrate on the production side of the factories. ''That is why there has never been shortage of interest in investing in our industrial park even though the rent we charge is higher than in other places,'' Mr Chen said. He also admitted that the early move into the real estate sector was a crucial factor that contributed to the rapid growth of the group. ''The key is to look for good locations before you start a project. If you do that, you don't need to worry about sales,'' he said. ''Real estate business provides good return. It is a good way to make money.'' The group now owns 2,000 acres of land - 300 acres in Shenzhen and the rest in Dongguan. It also implemented a road-for-land strategy. Last year, the group invested 75 million yuan on building an expressway and a bridge for Dongguan. In return, the municipal government granted a nearby site to the group for development. On completion of the road and the bridge, which is expected before the Chinese New Year, the site of about 1,000 acres will be developed into a high-technology zone, with a commercial centre and villas. Apart from manufacturing and real estate, the group's business scope is expanding to include trading and tourism. Its manufacturing products include electronic components, mechanical transmissions, magnetics, chemicals, ceramics, garments, shoes, plastics, toys, weaving, arts and crafts, and lighting products. Another project under way is to build a 100,000 KW thermal power plant with the Municipal Electrical Bureau. Last year, industrial output totalled one billion yuan and profit after tax was 70 million yuan. The group's future strategy is to consolidate existing industrial projects and at the same time speed up the development of high-technology industry and real estate. Last year, it was transformed into the first shareholding township enterprise in Dongguan. After the incorporation, Huang village owns 70 per cent of the shares, with the remainder held by semi-government agencies. After the transformation, Winnerway was freed from the control of the Huang village administrative district, becoming an independent entity. Funds raised from the expansion were used in industrial projects and real estate. The Guangdong Government has endorsed the listing of Winnerway on the Shenzhen stock exchange, but final approval has to be obtained from the China Securities Regulatory Commission.