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SCMP Reporter

STONE Electronic Technology will be catapulted back on to the fast-growth track with its aggressive launch of five strategic projects after a four-year consolidation.

  ''We will enter into the second phase of rapid growth beginning this year in both sales and profit,'' said president Duan Yongji in Hong Kong yesterday of the mainland-based manufacturer and distributor of word processors which was listed in the territory in August last year.

  The company experienced its first phase of rapid growth in the 1980s, and Mr Duan expected it to grow at an annual rate of 30 per cent in the next three years.

  He said Stone would spend US$100 million on product development in five years and the group, including its parent, Beijing Stone, would earmark $1 billion for overall development over the same period.

  ''The equity market is only one of the many ways of raising funds for the expansion plans'' said Mr Duan, adding that the company was highly liquid, with minimal long-term debt.

  He expected the five major product categories to contribute 20 per cent of the company's revenues this year and 50 per cent next year, when the projects became fully operational.

  Mr Duan said Stone had been chosen by the State Tax Bureau and the Ministry of Electronics Industry as one of four manufacturers of electronic cash registers under Beijing's ''tax monitoring system''.

  The other three are computer maker Great Wall, China Aerospace Corp, and the central People's Bank of China.

  The registers will calculate China's value-added tax (VAT) on sale of goods which became effective on January 1 as part of taxation reforms.

  The project will need total investment of up to $13 million in three phases, with an initial investment of $3 million this year.

   The registers will be officially launched in September.

  Mr Duan estimated that China could use 100 million of the cash registers which would be installed in all commercial enterprises.

  He said there were virtually only two manufacturers, as Stone would team up with Great Wall for the project.

  They would first establish an associate company which would seek joint ventures with overseas partners.

  He said Stone would begin producing the registers this year, with annual production going up to 300,000 units in three years.

  The registers would be priced between 2,000 yuan (about HK$1,770) and 20,000 yuan, bringing the company orders worth about 1.2 billion yuan a year.

  Mr Duan said the central bank, and the US-based aircraft maker Hughes, would be engaged in the provision of a satellite communications network which would connect tax bureaus in 200 cities in 1996.

    Stone would provide the software for the network, he added.

  He said the firm would gain a steady source of foreign exchange income from a joint venture with Japanese-based Matsushita for the manufacture of lighting fixtures.

  The venture would export 55 per cent of its products and the remaining 45 per cent would be for the domestic market which required 60 million sets of lighting fixtures a year.

  He expected the plant to have production value of 80 million yuan this year, 370 million yuan next, and 900 million yuan in 1996.

  As part of its efforts to develop a Chinese-version computer software, Mr Duan said the company would introduce ''Chinese platform'', a Chinese-language operating environment to convert the English application into Chinese, which was claimed to be a world first.

  He said the company aimed to sell 50,000 sets of software this year and 100,000 sets next year, with US computer maker Hewlett Packard undertaking to buy 26,000 sets.

  There are three versions of the software, with the basic one selling for $200.

  In a bid to encourage greater use of word processors in China, Mr Duan said Stone would produce models which were more affordable and easier to use. The new models will be launched next month.

  Stone also will secure more distribution rights for overseas companies.

   It has just been appointed sole agent for AT&T products in China and has signed an agreement with the US company for software projects.

  Mr Duan expected the company's full-year profit, which would be announced soon, would beat the prospectus forecast of $54 million.

      He said the company's profit margin was being squeezed by the value-added tax as the company intended to keep the retail price unchanged to capture a larger market share.

  ''We hope our profit will be increased through more sales,'' Mr Duan said.



Computer maker expands with five major projects