Danieli, the world's leading supplier of equipment for the metal industry, plans to set up a wholly-owned foreign enterprise (WOFE) in Beijing before year end, 25 years after it entered the Chinese market.

The move came as overseas steel makers and equipment suppliers head for the fast-growing and lucrative Chinese market.

"We have a long-term commitment to China," said Palummieri Nicola, the future managing director of Danieli Metallurgical Equipment (Beijing) Co Ltd.

Danieli will invest more than 6 million euro (US$7.8 million) in the company, which will cover 21,000 square metres in the Beijing Development Area (BDA).

Danieli Metallurgical Equipment (Beijing) Co Ltd will purchase parts and components locally and assemble them into metallurgical equipment for Chinese customers as well as for export.

The company will recruit more Chinese engineers to strengthen its localization, intending to employ about 100 Chinese engineers in the coming two years.

Danieli signed co-operation agreements with the University of Science and Technology Beijing (USTB) and the Italy-based University of Udine on November 18, sending 15 students from USTB annually to study in Italy and to be trained in Danieli's headquarters.

Danieli has completed and is constructing a total of 180 projects in single unit equipment or complete plants for a variety of Chinese steel makers such as Baosteel, Capital Steel and Benxi Iron and Steel.

Danieli's establishment of the WOFE in China is the latest move of overseas companies expanding into China's metallurgic market.

The nation is in great need of raw materials such as iron and steel to feed the appetite of a blistering economy and surging fixed asset investments.

China's major steel makers vowed to increase output in the coming years to meet the rising demand.

They are currently revving up efforts to upgrade facilities and are bringing in state-of-the-art technologies to raise output, which in turn, offers business opportunities for domestic and overseas metallurgic equipment and service suppliers.

China Steel and Iron Association predicted China's steel output would increase by 17 per cent year on year to stand at 265 million tons in 2004.

The investment in the sector, although slowing down due to macroeconomic controls placed by the central government in April, is still at a high level, reflecting a 34.2 per cent increase in the first nine months.

(China Daily 11/29/2004 page10)