But the move failed to draw a knee-jerk reaction from rivals of China's last independent photo filmmaker.

Market leader Kodak ruled out an immediate cut in the prices of its products but warned there was considerably scope to do so.

Lucky launched a national price cut on its key Super 100 series, with the price falling from 13 yuan (US$1.57) to 10 yuan (US$1.2).

Lucky announced the price cut at a news conference for its appointment as the official film for the 10th National Winter Games.

The Super 100 accounts for 80 percent of the film maker's sales.

Wang Shulin, vice-general manager of the Lucky Film Group, said the price reduction followed cost cuts - not competition.

"We could have cut it by more," Wang said.

"Our costs have decreased by an annual rate of 6 percent in recent years because of improved management of raw material use and the application of new technology."

The price cut is aimed at seizing more market share and cracking down on the brisk business of fake films, he said.

The price cut will not cover its Super 200 film, which is a higher-grade product of Lucky, Wang added.

An official from Kodak, who declined to be named, said Kodak would not lower its price.

"It is not our strategy to acquire the market through price and Kodak will not do it," the official said.

Kodak has room for a price cut because of its high degree of localization in China, the official said.

"If Kodak and Fuji apply the price strategy in China, I do not think Lucky will feel comfortable," the official said.

The official said the Kodak 100 film - the most similar product to Lucky's Super 100 - covers just a small part of Kodak's sales.

The film giant currently majors in Kodak 200 and 400 films which produce better images.

The official said four reasons will push a manufacturer to drop its price: Cheaper materials, old stock sell-off, grab for market share and pure malice.

But the price cut was reasonable since Lucky has the capability, the official said.

Fuji (China) Photo Products Co Ltd was unavailable for comment yesterday.

As the only domestic filmmaker, Lucky was once very popular as foreign companies courted it as a possible joint venture.

Those vying for Lucky's attentions included Kodak, Fuji, Konica, and Belgium's Agfa.

Establishing a joint venture with Lucky was seen as a short-cut to winning a bigger market share ahead of the country's entry into the World Trade Organization.

Many reports last year said Lucky would ink a deal with Fuji but there has been no result.

Lucky is co-operating with Epson to offer digital image processing services in its local outlets.

The Kodak official offered no news on whether talks with Lucky were progressing.

China is considered the largest potential film market, even though only 0.1 roll per person is consumed in the country, compared with 3.2 in the United States and Japan.

(China Daily December 10, 2002)