Chinese glass producer Luoyang Glass hopes the four big state-owned asset management companies (AMC) will consolidate their equity holdings in various manufacturers to create one of the world“s bigge…
Chinese glass producer Luoyang Glass hopes the four big state-owned asset management companies (AMC) will consolidate their equity holdings in various manufacturers to create one of the world“s biggest float glass makers. The proposal promised to help ease the glass glut and tap economies of scale, said chairman Guo Xiaohuan. He hoped the resulting group would coordinate procurement and marketing activities around the country. Xiaohuan planned to initiate a meeting during the second half of the year with the AMCs to discuss the idea. “I think this is a step that has to be taken. Without it, the domestic industry may continue to engage in disorderly competition,” said the chairman. Beijing created the four AMCs in 1999 to clean up non-performing debts at the four big state-owned commercial banks – the Bank of China, the China Construction Bank, the Industrial & Commercial Bank of China and the Agriculture Bank of China. Xiaohuan said the AMCs together had about 20% of the shares in China Luoyang Float Glass Group, Luoyang Glass“s parent. They acquired the stakes when the State Council authorized debt to equity swaps for yuan 270 million“s worth (about HK$ 252.99 million) of debt the group owed to the banks. Similar swaps have seen the AMC with holdings in more than 10 domestic float glass makers. Between them, these companies had about 23 of the 69 domestic float glass production lines, including Luoyang Glass“s seven, Xiaohuan said. He explained that there were more than 40 float glass makers, and most of these were controlled by the state. That compared with three in Europe and six in the United States. Luoyang Glass posted net profit of yuan 65 million yesterday for the year to 31 December – a 26.55% year-on-year increase. This was achieved on turnover which rose 9.66% to yuan 901.5 million. Last year, Luoyang Glass succeeded in cutting costs by 8%, while its average product price rose 10%. However, pressure from new unauthorized production facilities in December 2000 resulted in a significant slowing of profit and turnover growth. “There could be another price war this year,” warned Xiaohuan.