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Friday, 12 July, 2002, 05:19 GMT 06:19 UK
China bike giant falls into the red
Bicycle transport in Beijing
The bicycle's pivotal role is under threat
Shenzhen China Bicycle, once one of the biggest bike makers in the world, has fallen into the red - a further sign of how rapidly the market is evolving.

The company said it expected to post a loss for the first half of 2002, something that could eventually lead to its shares being suspended from trade.

China Bicycle is hamstrung by a mountain of debt, and has made no progress in restructuring talks.

Investors are wary of touching the firm, because bicycles - long the mainstay of Chinese transportation - are in decline as public transport improves and the expanding middle class turns to the car.

From bikes to bowls

China Bicycle, once one of the country's best-respected enterprises, has failed to turn a profit for the past five years.

Last year, the company lost 2bn yuan (155m; $241m), the second-biggest annual loss reported by a listed firm in China.

Unlike its rivals, China Bicycle has made little effort to diversify away from its shrinking core market.

Phoenix has moved into hi-tech goods and tourism, while Shanghai Forever Bicycle has shifted into bowling equipment.

China Bicycle's attempts to shift production have been hampered by its lack of investment capital.

Delisting deadline

The firm now faces delisting from the Shenzhen Stock Exchange this year.

According to Chinese securities law, a firm's shares are deleted from the exchange if it makes a loss for three successive years.

China Bicycle was exempted because its 1999 loss was only recorded on a technicality.



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