China Econ Planner Urges Plate-Glass Indus Consolidation

BEIJING -(Dow Jones)- China's stronger glass-plate manufacturers should merge and acquire rivals while the domestic industry faces excess production capacity, said the National Development and Reform Commission.

The commission said the current situation of fierce competition and overcapacity provides an opportunity for stronger local companies to expand quickly through mergers and acquisition at low cost.

The industry should "strenuously try to form more than 10 large-scale enterprises during the 11th five-year plan (that runs from 2006 to 2010)," the economic planning agency said in a statement dated Tuesday on its Web site.

The commission also said it will stringently control new expansion in production capacity in the eastern coastal parts of China, where production is concentrated, and aims to cap annual overall output capacity at 550 million weight cases, or about 27.5 million tons, during the 2006-2010 period.

According to the China Architecture and Industrial Glass Association, China's plate-glass output last year was 387 million weight cases, or about 19.4 million tons.

The latest call to control capacity growth in the industry comes as China continues trying to rein in investment growth, which it fears will lead to excess capacity and losses. Since April this year, the commission has issued control measures aimed at 12 sectors, including plate glass.

In the latest statement, the commission said high energy prices and capacity growth have led to losses in the overall industry during the first three quarters of this year.

As part of China's overall push for overseas expansion by Chinese companies, the commission also urged Chinese glass companies to increase their market share worldwide.

Local companies should "change to focus on quality and returns growth to grow the industry, rather than pursue (large) scale and quantity," the commission said, echoing recent government calls to focus more on achieving balanced and sustainable growth, rather than overly rapid growth rates.

600450 China Econ Planner Urges Plate-Glass Indus Consolidation glassonweb.com

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