THE first tenders under China's US$1 billion programme to modernise its grain handling, storage and distribution facilities are expected to be called before the end of the year. Construction and heavy engineering companies from Australia, Japan, Europe and North America are positioning themselves to participate in the programme. The World Bank is providing a US$500 million loan for the project, the remainder to be raised by China's central and state governments. Construction work will involve a whole range of projects including the building of silos and construction of modern port facilities for loading and unloading of grain. The Australian Wheat Board (AWB) is acting as project manager for the Australian consortium, which includes well-respected names such as Transfield and Bauldertone Hornibrook. Nigel Officer, the AWB's Hong Kong-based regional director for North Asia, said: 'Australian companies have long experience in this area and we feel that the AWB, with its long history and the close relationship it has developed, can co-ordinate their activities in China to best effect.' The AWB set up the Hong Kong office in the middle of this year to provide better services to clients in the region and to be closer to what Mr Officer described as emerging opportunities. Its contacts with China date back to 1960 when the first regular Australian wheat shipments were imported. Since then about 60 million tonnes of Australian wheat have been shipped to China, which is the world's largest producer as well as the largest importer of wheat, buying about 10 million-15 million tonnes a year. More recently, the AWB has been getting directly involved in the food business in China. In 1992, it took an eight per cent equity stake in a mid-size flour and feed mill in Shekou. The other partners in the joint venture include the Hong Kong-based Kerry Group and Top Glory, a Hong Kong subsidiary of China's Ceroilfood. Mr Officer said the expansion of AWB's activities in North Asia could include more joint ventures, considering that the wheat market in the region, particularly in China, was dynamic and growing rapidly. 'We recognise that changes are taking place in China. We are seeing a market economy providing for independent users to have a say in the type and quality of wheat they use,' Mr Officer said. 'The Chinese consumer is becoming more discerning, wants better quality and more choice,' Mr Officer said. 'That is putting pressure on the flour mills.' In tandem with the development of a more discerning consumer base, per capita consumption of wheat was increasing in the north, the traditional wheat basket, as well as the south, where rice is still the staple. Mr Officer said those trends had been fuelled by economic development, population growth and a partial shift away from traditional rice-based food to wheat products. The AWB was working closely with the central procurement authorities to make sure the Australian wheat imported into China met the required quality standards. 'The AWB's strategy is to produce wheat types in Australia that match end consumer quality requirements and we see good opportunities to develop our business in this sector,' Mr Officer said. After spending a lot of time in preparations, AWB recently entered the Taiwan market after an absence of 16 years and sold 100,000 tonnes of wheat worth US$20 million this year. The AWB will continue to focus a lot of attention on the Japanese and South Korean markets. 'The AWB is well established in both markets. However, there are opportunities for potential growth,' Mr Officer said. An office has been maintained in Tokyo for many years, which reports to Hong Kong. The AWB is also closely watching the market in India, which imported a million tonnes of Australian wheat in 1992-93 financial year. 'India is a market that has enormous potential,' Mr Officer said. 'At the moment the country is an irregular importer, but in the long term the market will develop with the growing population.' The AWB's decentralisation means the Hong Kong office will be responsible for about a third of its annual sales, which amounted to A$2.5 billion (HK$14.33 billion) last year. The AWB is also looking for joint ventures related to its core business - grain marketing. Mr Officer said that with the establishment of a Wheat Industry Fund, AWB was looking for opportunities to maximise its potential by setting up joint ventures that will strengthen and add to its existing business relationships.