Li Dang, vice president of Genertec received interview by China Daily during 2005 NPC & CPPCC

China General Technology (Group) Holding Ltd (Genertec), one of China's top trading firms, is in talks with distributors in Europe and South America to seek possible acquisitions and co-operation.

This marks a crucial step in the company's efforts to transform itself from a traditional trading firm into an integrator of export business management, according to Li Dang, director and vice-president of the company.

"This way we can extend our reach directly to sales terminals, control the supplying chain in overseas market and improve profit-earning ability," Li told China Daily on the sidelines of the ongoing session of the Chinese People's Political Consultative Conference (CPPCC).

The move was taken at a time when specialized trading firms are feeling the pinch of market opening followed by China's entry into the World Trade Organization (WTO) which grants foreign trading rights to all the companies.

With market share being squeezed by increasing participants and more manufacturers choosing to contact directly with foreign buyers, traditional traders are forced to find new ways to diversify their business and seek a new business mode to survive.

Genertec's approach will change the traditional trading mode under which business finishes at the point when Chinese trading firms hand the commodities to foreign agents or wholesalers, rather than retailers.

"We can never grow stronger and bigger without transformation," Li said. However, she declined to name the possible acquisition targets and co-operation partners and investment to be involved in the bold step. "It is too early to announce the name list," she said.

Moreover, she said the step is in line with Premier Wen Jiabao's calling for deepening reform of State firms and fostering big enterprise groups with international competitiveness in his government report delivered to the National People's Congress on March 5.

Li, a CPPCC member, disclosed that at first, Genertec may choose to take stakes in some overseas distributors or form joint ventures with them. These can be engaged in distribution of both a single product and various staple commodities.

It is also busy contacting large manufacturing companies overseas as it tries to become management provider for their purchasing ambitions in China.

In addition, Genertec is looking for opportunities to acquire some domestic enterprises with products related to Genertec's core business - it remains a trading giant in technology and machinery equipment. More efforts will be made to step into industries such as pharmaceuticals, financial, real estate, and logistics.

Li said such a diversification drive will mark another important step for the trading company to garner more profits from non-trading business.

It is targeting to reap half of its revenue and profits from non-trading business by 2006 when its sales revenue is expected to reach 15 billion yuan (US$1.8 billion) while net profits will amount to 680 million yuan (US$82 million).