While he declined to give the budget for the intended acquisitions, Mr Green revealed that the factories were making plumbing products not to international standards.

But Arnhold would upgrade the firms to produce goods that complied with international standards should the acquisitions take place.

Those would be joint-venture acquisitions made together with American and European partners.

''It is our expectation to take a majority stake, but we're not rigid about it,'' said Mr Green.

Arnhold would supply the marketing management and act as the mainland companies' distributor. Some of the products would eventually be exported to Hong Kong.

''We are very keen to invest in manufacturing in China,'' said Mr Green. It would help the company secure a bigger market share in China and Hong Kong.

''In the years ahead, China will account for an important proportion of our investments,'' he said.

''Our main concentration is in China. The greatest opportunities lie in China. We view China as our home market.'' Arnhold is already selling to more than 120 hotels in China, mostly in big cities and especially Shanghai. The company has 20 sales staff on the mainland.

Although China's imposition of valued added tax would slow the growth of the country's real estate sector, Mr Green expected the company's market to grow as more high-quality buildings were erected.

He said the potential in the country was still unexplored, with only one million of the 20 million homes built every year using quality products.

The top end of the market would expand as mainlanders' living standard rose, he said.

''In China, it's always more difficult to operate than in Hong Kong because most of our experts are hired from Hong Kong,'' he said. Extra travel costs and salaries raised operational expenses.

He expected the group's business in the territory to benefit from the booming property sector.

''In Hong Kong, the market is getting stronger and stronger because property prices are going up so high that the developers are finishing properties with a higher level of quality. Therefore, our market in Hong Kong is very strong,'' said Mr Green.

''Most of our market is in the luxury sector, but middle-range properties are also finished at high standards because their prices are so high.'' Demand for quality building materials was expanding.

He said there were risks in the Hong Kong market. ''Property prices are so high that there is a risk of the property market collapsing . . . there's always a risk when things shoot up so fast.''