Shanghai, preparing to host the 2010 World Expo, will invest at least 50 billion yuan (US$6.05 billion) this year in infrastructure projects.

Last year, the city spent about 40.2 billion yuan (US$4.9 billion) on infrastructure, said Ma Ziqiang, director with Shanghai's Construction Administration Office.

Ma made the remarks last week at ShanghaiMart to dozens of overseas building materials companies.

As China's first and Asia's largest permanent international trade facility, ShanghaiMart has become a major gathering place for overseas building materials businesses from the United States, Britain, Canada, Italy, Germany, Spain, Belgium, Japan, South Korea and Brazil.

Shanghai will spend at least 16 billion yuan (US$1.9 billion) on building materials annually over the next three to five years.

Business opportunities also exist elsewhere.

Beijing officials said earlier this year the capital's fixed-assets investment for 2003 would exceed 200 billion (US$24 billion).

China's building materials industry is expected to grow about 10 per cent over the next five to 10 years, indicates a recent report by China Building Materials Industry Seminar.

Overseas building materials, especially "high-quality, high-tech and environmentally friendly" products, are urgently needed in Shanghai, Ma said.

China's massive building materials industry - especially the raw products sector - has suffered from over competition since the middle 1990s.

"We should do a good job in planning and readjusting the development of our steel, automobile and building materials industries to prevent blind expansion and disorderly competition," Premier Zhu Rongji said in his report on the Work of the Government.

Zhu made the comments last Wednesday during the opening of the first session of the 10th National People's Congress.

The overall situation has not changed much in recent years, said Pan Huibang, director of Shanghai Interior Decoration Materials Professional Committee.

Pan said demand for high-grade building materials was increasing fast in China's cosmopolitan cities such Shanghai, Beijing and Guangzhou.

"Governments and individuals in these cities are seeking better quality (building materials)," Pan said.

Compared with domestic building materials providers, overseas companies have advantages, especially in terms of technology-intensive products, Pan said.

Overseas building materials businesses have since the late 1990s increased investments in the Chinese mainland.

Cost-savings also contribute to the gold rush.

"We can save at least half of the costs when manufacturing our products in the Chinese mainland," said Zhou Zhenhao, general manager of Taiwan TCK Industrial Co Ltd.

Zhou's firm specializes in energy-saving and polymer materials.

The company has invested about US$24 million to establish manufacturing facilities in Chongqing, in Southwest China and Dalian, in Northwest China.

"All of our products are now made in the Chinese mainland," said Zhou.

The firm's head office is in Shanghai.

The Chinese market, however, is not as perfect as many overseas businesses believe, Zhou said.

Lack of unified standards and knock-off products are two major issues facing overseas building materials suppliers.

"Even if our products pass the quality tests in Shanghai, they must be retested in Beijing before entering Beijing's market," Zhou said.

Each Chinese city's standards are different.

"Repeated tests are really time consuming," Zhou said.

In developed countries such as Japan and the United States, construction materials are tested once in accordance with national standards set by their federal governments.

As for protection of intellectual property rights, Zhou said the situation has improved since the early 1990s.

"But we are still afraid of our Chinese mainland competitors' who are capable of copying our products," Zhou said.

(Business Weekly March 19, 2003)