Australia benefits from China move

By LIAM DANN

Richina Pacific's plans to cash in on the growing Chinese automotive market by making leather car seats will not mean a boom for local tanneries.

Instead, the Australian industry is likely to benefit from the company's joint venture with American firm Garden State Tanning, said chairman Richard Yan.

Richina was already the single largest local buyer of pelts, accounting for about 17 per cent of the market, he said.

The company had reached the limit of what it could buy in New Zealand. Local suppliers were reluctant to commit any more product to one customer, said Yan.

Richina would probably increase its supply of Australian leather.

The company's Shanghai tannery is one of the largest in the world. When upgrades are completed next year, its production capacity will triple to more than 61 million metres of leather a year.

The tannery produces shoes, upholstery and garments but has underperformed in recent years as factors such as fickle fashion trends have turned against it.

Richina hopes that 30 per cent of the tannery's capacity will eventually be used for car seats.

The Chinese car market is more than doubling each year and is forecast to exceed US production by 2015.

As well as its leather business, Richina Pacific owns the Blue Zoo Aquarium in Beijing and New Zealand construction company Mainzeal.

Plans to move the company overseas, probably with a listing on the Singapore exchange, were progressing well, Yan said.

The move would take place in two steps, he said. Registration of the company would be transferred to an international base such as Bermuda by the end of the year.

The listing in Singapore was likely to be completed early next year.

The move was logical for Richina as more than half of its business was now international, Yan said.

It made sense to be listed somewhere with a US dollar base currency as that was the currency the company did all its trading in.

Yan said Mainzeal's operations would not be affected by the move.