Wafangdian Bearing Company Ltd. (Liaoning, China) posted improved first half results in 2002 over 2001, with sales back to and now sharply above 2000 levels.

Wafangdian is China's largest bearing company and as such is considered a bellwether for bearing manufacturers across the Pacific Rim. SKF (Sweden) holds a 20% stake in Wafangdian.

First half 2002 sales improved over 15%, to 575.66 million Yuan (USD $69.55 million) from 505.06 million Yuan ($61 million) for the same period in 2001.

2002 net profit reached 21.95 million Yuan ($2.6 million), up only slightly from 21.60 million Yuan ($2.6 million) in 2001.

All of the results, however, serve to illustrate the margin erosion effect of continuing price competition in the marketplace. For the first half of 2000, Wafangdian managed to earn 25.8 million Yuan ($3.8 million) on sales of only 514.1 million Yuan ($62.1 million), for a margin of 5% -- while 2002's margin was 3.8%.

During the second quarter, Accounts Receivable grew by over 6 million Yuan to 848.53 million Yuan.

During the half, inventory declined sharply to where there is now less than one turn, from 575.52 million Yuan at the beginning of half to 514.10 million Yuan today.

Overall, Wafangdian reports return on net assets during the first half dipped to 2.07%, from 2.08% for all of 2001.