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First Chinese Firm to List in Canada
Hanfeng Group, a private firm based in Dalian, is about to become the first Chinese firm to list in Canada.

Hanfeng expects to raise C$45 million (US$30.70 million) through its initial public offering (IPO) in Vancouver, on the Canadian Venture Exchange.

The IPO will be launched this week.

Hanfeng on Friday will issue 30 million shares at C$1.50 (US$1.02) per share.

The Vancouver and Alberta stock exchanges merged in late 1999 to form the Vancouver-based Canadian Venture Exchange.

Most of the 2,300 companies listed on the bourse are small and medium-sized high-tech, natural resources and manufacturing enterprises.

Funds raised by Hanfeng will be used to finance its business expansion in China's large cities - including Beijing, Shanghai and Dalian, said company President Yu Xinduo.

"Our business focus (after the listing) will still be on China's market, which is so huge and promising," Yu said.

Hanfeng, with US$2 million in registered capital, has grown since its founding in 1996 into one of China's major suppliers of trees and flowers.

The company has completed numerous gardening projects, and has undertaken several key beautification projects in Dalian and Beijing.

Hanfeng plans to invest 60 million yuan (US$7.24 million) to launch later this year a high-end fertilizer factory in Shanghai, China's business hub.

The company plans to launch a second fertilizer plant, with an investment of 40 million yuan (US$4.83 million), in Beijing.

"We believe there will be tremendous business opportunities for us in the next several years in Beijing and Shanghai," Yu said.

Those cities in particular, Yu added, will undertake great efforts in the next few years to improve their environmental images.

Beijing will host the 2008 Summer Olympics, while Shanghai will host the 2010 World Expo.

Hanfeng will begin importing top quality, high-end trees and grasses from Canada and the United States.

Hanfeng last year acquired McVicar Minerals Ltd, a growing mining company based in Canada, marking the first step towards its aggressive goal of overseas listing.

Most of China's firms have previously decided to list in the United States, London, Hong Kong or Singapore, which are generally considered regional or global financial centres.

"The reason we chose Vancouver as our first listing destination is we have many business links there," Yu said.

The acquisition of McVicar, he added, facilitated Hanfeng's preparatory work for a public flotation.

Vancouver is just the first stop for the ambitious Yu.

Hanfeng will be transferred to the Toronto Stock Exchange (TSE), Canada's largest stock market, which provides an efficient, liquid market for senior equities.

Companies listed on the TSE represent a broad range of businesses from across Canada, the United States and other countries.

With revenues of C$17 million (US$11.60 million) last year, Hanfeng's net earnings stood at C$6.7 million (US$4.57 million).

Hanfeng is one of the largest, newly emerged private environmental firms in Dalian, the business hub in Northeast China's Liaoning Province.

The company will double its revenues annually and its profits will grow 40-50 per cent annually in the next several years, Yu predicted during an interview with China Business Weekly.

Hanfeng specializes in environmental-protection-related products and services and landscaping. It has four wholly owned subsidiaries and one holding company. It has assets in China, Canada, the United States and Britain.

Hanfeng's business also includes exhibition, travel and education services.

"It is our plan to eventually list on the NASDAQ, and we hope that goal could be achieved next year," Yu said.

That would be Yu's final destination in a long trip in the world's capital markets.

If successful, Hanfeng would follow many other Chinese firms that have listed in the United States - either on the New York Stock Exchange or the NASDAQ - to attract investors.

Hanfeng also hopes to learn sound management techniques from firms in developed markets, Yu said.

The company will also invite numerous foreign experts to join its senior executive team after the listing.

With the deepening of China's financial reform and opening-up, international investments, including those by Canadian firms, have quickly flowed into China.

"Foreign investors can share the rosy returns from the rapidly growing Chinese economy by buying into our stocks," Yu said.

Last year, Canada's exports to China hit US$2.56 billion, much higher than China's exports to Canada, which were worth US$10.2 billion. Meanwhile, Canada's investments in China hit US$420 million.

Many Canada-based financial giants, such as Manulife Insurance Group, have established joint ventures in China.

Hanfeng's move, however, is being billed as a new attempt to attract foreign investments.

Experts predict more firms will follow Hanfeng's lead.

"But we do not know how many firms have similar plans to list in Canada," said Chen Qi, an official with the Canadian Embassy in Beijing.

(Business Weekly June 11, 2003)

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