This flushed out much-needed opportunities for the company in trouble. By outbidding many rivals to provide billions of dollars worth of imported equipment for the projects, the company laid a solid foundation for a staggering take-off.

Finding a way out

In 2002, Instrimpex, together with other two state-owned trade companies, were merged into the Genertec International Corp., in a government bid to consolidate trade forces. This offered a catalyst for the company to further streamline the corporate structure and strengthen management efficiency in line with the unfolding grim economic realities.

Meanwhile, as global trade supply chains have become more sophisticated, international trade has come to mean far more than simply dealing goods between sellers and buyers.

Instrimpex offers a prime example. Besides imports and exports, the company also needs to properly store the products before transporting them to buyers or end-users. In addition, it has also made a push into maintenance and other after-sale services of the hi-tech equipment with a view to sharpening its competitive edge and grabbing the market share as best as it could.

"The longer the supply chain extends, the bigger value you can create," said An. "Moreover, the high-quality services can also help secure long-term client loyalty."

So far, the company has owned hundreds of tax-free warehouses and technical service stations across the country staffed with skilled technical staff.

In 1985, it set up the subsidiary Instrimpex INSTEC Import and Export Corp. to integrate all the service businesses ranging from product exhibitions to maintenance. After years of torrid growth, INSTEC became a world-famous technical service provider with annual sales revenue of more than 1 billion yuan ($146.3 million).

Another viable strategy Instrimpex has employed has been to specialize in multiple areas. For instance, The company has, in recent years, decided to focus on the imports of medical instruments, broadcasting and television-related equipment, as well as IT and environmental products—rather than engaging itself in trading whatever goods available.

It has also expanded its business scope to try distribution. For instance, the company has entered partnership with the U.S. giant General Electric to distribute its medical products in China. It has also become the distributor and agent for some other top multinationals, including HP, Toshiba and Phillips.

"I believe the company has great potential to grow as a distributor, as we tighten efforts to build a solid sales network across the country, though it brings higher risks and expenses as well." said An. "It is also part of our strategy to edge toward becoming a professional provider of supply chain services."

Building on the success of other state-owned trade companies, An said his company also realizes the importance of securing diversified sources for growth and development. He added his company now aims to tap into the real manufacturing sector in a few years.

There are, of course, a few shining examples. Through years of reforms and restructuring, the China National Cereals, Oils and Foodstuffs Import and Export Corp., for one, has gained a solid foothold in food processing and production, and become a powerhouse in China's food industry with many processing and production bases and a number of well-known brands to its credit.

The SinoChem Group, another giant in the country's petrochemical industry, also turned from a purely state-owned trading firm into a conglomerate, dealing in not only within its traditional lines of goods, but also stepping into many new areas such as metallurgy, farming, finance, real estate and minerals. Both of these companies have been listed among Fortune's Top 500 Companies.

An added that the company has largely weathered the current financial storm, despite the fact that its exports were mainly of small and medium-sized high-end equipment.

"The biggest ailment was that a number of financially distressed foreign buyers have been stalling payments," said Geng of Instrimpex's Business Management Department. "But the downturn has also provided rare opportunities for us to grow as it forces many smaller rivals out of the market."

Reforming China's Foreign Trade

Under the planned economy, China adopted a centralized management system in the field of trade and external economic affairs, and the country's trading companies, big or small, were exclusively state-owned firms conducting their business according to mandatory centralized planning. Since 1978, however, the government has pushed for a series of reforms in the sector, in an effort to boost foreign trade and develop a socialist market economy.

- 978-1987: Reforming the centralized management system, relaxing the right to engage in foreign trade, reforming the mandatory planned management, re-introducing trade license system, implementing export rebate;

- 1988-1990: Carrying out contracted managerial responsibility system, setting targets on revenue and economic benefits for trade companies, regulating trade development through pricing, exchange and interest rates, export rebates and credit;

-1991-1993: Allowing trade companies to share the responsibility for their own profits and losses, scrapping subsidies for export, reforming foreign exchange earnings-sharing arrangement for fairer competition among all trade companies;

- 1994-2001: Unifying relevant policies regarding foreign trade operations, further relaxing the right to conduct foreign trade, pushing for integrating trade with industry, and practicing agent system;

- 2001 - Present: Empowering all qualified businesses to engage in foreign trade by replacing the old examination and approval system with a new registration system.

(Source: Ministry of Commerce)