SHENZHEN Gintian Industry Co, which has businesses ranging from property to industrial concerns, is expanding into managing hospitals and cruises. The Shenzhen-quoted company has struck a deal with a government hospital to jointly operate a non state-run hospital in Shenzhen, and is set to provide Shanghai's big spenders with holidays on cruise liners. Running the two concerns in China's affluent cities could be big business. Quality medical services are increasingly demanded with residents' growing affluence, while cruising has become a popular indulgence among the rich in Shanghai. Thirty million yuan (about HK$26.6 million) has been earmarked for the hospital and 20 million yuan for the cruise operation. Both are expected to be in service this year. The new moves will add to Gintian's existing businesses of property development, manufacturing, equity investment, trade, and taxi and catering operations. However, as the company says, foreign investors do not like companies with ''stretched'' businesses, fearing that the firm will too easily lose its focus. ''Foreigners favour companies with single businesses such as China Southern Glass, for example,'' said Zhuo Bin, company secretary and head of securities. Gintian has a similar corporate strategy to China Vanke Co, where the management has recently been castigated by shareholders who proposed a corporate overhaul. Mr Zhuo dismissed suggestions that the company would face the same problems as its Shenzhen-quoted counterpart. ''Having the same corporate strategy does not necessarily mean that the management standards and company size are the same - that's very different. ''I don't want to comment on Vanke's case but as far as the company is concerned, shareholders are satisfied with our operations,'' he said. While foreigners may well be baffled by Gintian's new moves, Mr Zhuo said a diversified portfolio would fit well in the rapidly changing Chinese economy. ''The mainland economy and environment is changing every day, so suitable and rapid adjustments are required,'' he said. The macro-economic policies implemented last year had tightened credit, resulting in across-the-board tightening in banks' mortgages facilities on property projects, Mr Zhuo said. The tax reforms imposed on January 1 this year also affected property developments, he added. Property development has borne the brunt of the introduction of the capital gains tax although the exact rate has not yet been fixed. Mr Zhuo said the company was mainly affected by the newly imposed tax reforms rather than by the credit tightening. Only 60 per cent of the company's projects in Shenzhen, which had been put up for sale late last year, had been sold. Mr Zhuo said if it were not for its ''strong fundamentals and back-up from banks with which we have good relations'', the adverse impact would not be ''that slight''. Many property developers in China had reportedly been hit hard by the capital gains tax, some with projects being coolly received while others had projects put on hold. ''If you stay firm with the core business, you will be in trouble if the sector is hit by the Government's macro-economic measures,'' he said. ''Mainland enterprises differ from overseas ones which are relatively bigger in size. You won't feel the overseas companies are diversified, even if they are, as their core business is huge. ''As China is still in the 'capital accumulation' stage, diversifying is imperative for companies to spread risks and maintain a steady earnings growth.'' Diversification had always been welcomed by mainland investors, as it brought the most out of the opportunities available in China, Mr Zhuo said. But he conceded that it would be difficult to convince holders of B shares to favour the company's corporate strategy. ''I can't at the same time meet the requirements of holders of A shares and B shares,'' he said. So, in order to comfort B shareholders, the company tried to keep non-core sectors to a minor portion of turnover, he said. At present, property development accounts for half of the company's turnover, followed by manufacturing and equity investment at 30 per cent and trade at 10 per cent. The remaining 10 per cent is shared by the operations of taxis, restaurants, shopping centres, supermarkets, and the latest - hospitals and cruises. The company has just posted after-tax profits of 123.2 million yuan for the year ended December 31, slightly higher than its forecast 120 million yuan when it applied to list B shares in April last year. Mr Zhuo said the company managed to achieve the profits projected because of the diversification strategy. The company raised HK$407 million from its B share issue in Shenzhen for its listing in June. It was among the first companies to list A shares in Shenzhen. Looking ahead, Gintian is to increase its industrial investment, while maintaining the scope of property development and equity investment. Mr Zhuo said that by June the company would move all its garment factories in Shenzhen to Hubei province - China's cotton production base - in order to reduce production costs. Another plan is to move some garment factories in China to South America to lower the production cost for products intended for that market, which is one of Gintian's biggest. The expansion of the company's dealings in computer floppy disks, backed by the proceeds of the B share issue, has enabled it to produce 20 million floppy disks a month, mostly for export. Mr Zhuo said 70 million yuan was used to upgrade the production lines, with technology imported from Japan and the United States. In its core business of property development, Gintian had eight property sites in Shenzhen which could be turned into 100 million sq metres of floor area, he said. Mr Zhuo expects all eight projects will be completed this year and pre-sales to start in August. They are mostly commercial and residential high-rises including the Gintian Building, where the company's head office will be located, Ginfu Building, Ginan Mansion and Ginyuan Building. Asked whether the Government's austerity measures would affect sales, he said: ''We are confident that they could be sold, as all are located in the city centre.'' The company also has developments in Shanghai, with a site area of about 15 million sq metres, Shantou and Huizhou. In the face of the relatively cooling interest in stocks, Mr Zhuo said the company's equity investment still maintained considerable earnings profits. To date, the company has spent about 40 million yuan in equity investments in more than 10 enterprises, of which four are listed. ''We expect to put up to 10 per cent of our investment total in equity investment this year,'' he said. To fund these projects, Mr Zhuo said the company was planning several possibilities, including listing on a foreign stock exchange. ''We are considering listing overseas, probably via listing joint-venture companies which are registered offshore,'' he said. This would be the best method at the moment as listing mainland-listed companies offshore might not be feasible. ''Listing on an overseas exchange is not just for raising capital - it will help raise our reputation offshore, or perhaps bring us more business opportunities,'' he said. Contacts had been made with some overseas exchanges on that possibility, he added.