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    China Business
     Jan 10, 2006
Industry still king, but changes loom

In spite of the growing importance of services, industrial firms remain the pillar of the Shanghai economy. This was shown by the city's 2004 listing of its top 100 enterprises; nine of the top 10 firms were primarily manufacturing-oriented, with Lianhua Supermarket Co Ltd the only exception.

Within the manufacturing sector, however, emphasis is gradually shifting to high-end products, with the "new materials" and flat-panel display industries earmarked for accelerated development in the next five years.

The listing of the top 100 enterprises for 2004, in terms of "comprehensive strength", was led by steelmaker Baoshan Iron and Steel Co Ltd. The company ranked first with sales revenue of



58.638 billion yuan (US$7.25 billion), 15.281 billion yuan higher than the second-place firm. The sales revenue of Baosteel was 33.877 billion yuan in 2002. It grew 30.3% year-on-year in 2003 and 32.8% in 2004.

The enterprises in second to 10th place on the list were, in order, Tech-Front (Shanghai) Computer Co Ltd, Shanghai General Motor Co Ltd, Shanghai Volkswagen Automobile Co Ltd, Sinopec Shanghai Petrochemical Co Ltd, Shanghai Municipal Power Company, Lianhua Supermarket Co Ltd, China Petrochemical Co Ltd, Shanghai Gaoqiao Subcompany, Tech-Com (Shanghai) Computer Co Ltd and Shanghai Tobacco (Group) Company.

Shanghai Municipal Statistical Bureau and the Shanghai Modern Statistical Industrial Development Center have, in line with international practices, worked out the ranking according to the sales revenue of enterprises, covering the industrial, hotel, construction and chain store sectors.

Compared with 2003, the major economic indices of the top 100 enterprises in 2004 have increased: their combined sales revenue reached 741.834 billion yuan, up 5.9% from the 700.671 billion yuan in 2003; and the sales revenue required to make the list was 1.677 billion yuan, 4.7% more than the 1.602 billion yuan needed in 2003.

Of the top 100 enterprises, 19 saw their sales revenue exceed 10 billion yuan each, three more than in 2003; seven saw it exceed 30 billion yuan; and two exceeded 50 billion yuan. One conclusion of the 2004 rankings is that industrial production remains the main force driving economic development in Shanghai.

'New materials' prioritized
Shanghai will give priority to the development of the new materials industry during the 2006-2010 period, and build innovation, production and export bases for the sector.

According to information released at the 2005 Shanghai forum on international development trends for new materials, the Shanghai Municipal Economic Commission has set a target that by 2010 the city's new materials industry will realize annual sales income of 100 billion to 120 billion yuan. This includes 45% for organic new materials, 40% for metal new materials, 10% for new building materials, 3% for inorganic new materials and 2% for compound materials.

Shanghai has taken the lead in the research, development, production and application of new materials in the country in recent years, and formed new systems for multidisciplinary interwoven technologies in the fields of metals, ceramics and high-polymer materials. The development of new metal materials, high-performance plastics, special rubber and differential chemical fibers has been the mainstream of the city's new materials industry.

According to the commission, the total output value of the new materials industry in Shanghai is set to reach 60 billion yuan in 2005. The industry is forecast to see profits of 10 billion yuan ($1.2 billion) and direct exports of $1 billion in 2010.

Nationally, industry experts said that the new materials industry would develop at a high growth rate during the 2006-2010 period, with the overall national new materials market expected to reach 650 billion yuan by 2010.

$6 billion for flat panel display industry
In early November 2005, Shanghai announced the establishment of its Panel Display Industry Base, as China's financial hub began its campaign to invest $6 billion to develop its thin film transistor-liquid crystal display (TFT-LCD) industry over the next five years.

The panel display industry will be developed as a new pillar industry of the metropolis. LCDs are mainly used for mobile phone, computer and flat-panel TV screens, and their manufacture is considered a high-added-value industry. The flat-panel TV market has grown explosively in China this year, with domestic sales surging 200% year-on-year. Within the flat-panel TV market, sales of LCD TVs have skyrocketed by more than 400% year-on-year.

As the international manufacturing sector shifts to mainland China, a large number of downstream LCD complete set assembly plants and main component assembly plants have clustered in the country, especially in the Yangtze River delta region. However, the production of LCD panels still relies on imports, and the technology-intensive upstream glass base plate enterprises are fully controlled by foreign giants, with no plants in China yet.

Two years ago, Shanghai set up China's first fifth-generation TFT-LCD production line, and the production line controlled by the Shanghai SVA Group was put into full production at the Shanghai SVA-NEC Liquid Crystal Display Co Ltd, a joint venture between SVA and Japan's NEC, in September 2005. The group's sales of 15-inch LCD screens surpassed 720,000 units in October, seizing a 40% share of the global market, ranking first in the world.

The Panel Display Industry Base, sited in the Xinzhuang Industrial Park of Shanghai, plans to cover an area of 2.2 square kilometers. With Shanghai SVA Group as the core tenant, the base will oversee the setting up of an LCD research institute; upstream enterprises engaging in glass baseplate, color filtering film and special chemical material manufacturing; two LCD production lines of above fifth-generation level; and downstream enterprises assembling LCD TVs, LCD monitors and notebook PCs.

Total investment in the base will be no less than $6 billion, of which $2.5 billion will come from overseas businesses. The base is expected to reach an industrial scale of more than $10 billion by 2010.

(Asia Pulse/XIC)



Chinese TV makers pressure foreign rivals (Nov 23 '05)

China's iron/steel industry to see M&A activity (Aug 24, '05)

China's supermarkets present export opportunity (Jun 24, '05)

Color TV sales rise in 2004 (Mar 25, '05)

 
 



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