Siemens will invest 7 million euros (US$8.4 million) in the wholly-owned company, says Peter Michelsen, general manager of the company.

The new enterprise, the only Siemens power automation centre outside Germany, would provide products, systems and complete power automation solutions tailored to China's power industry, according to Michelsen.

Customers include power generation plants, transmission and distribution companies, industry enterprises and infrastructure facilities.

"We are committed to developing this business in China and would like to see the company become the preferred power automation supplier and regional headquarters of power automation in Asia," he said.

The timing of the new company is appropriate as China cranks up the construction of generating plants and power grids to alleviate its current electricity shortage.

The State Electric Power Regulatory Commission expects the full- year electricity shortage in China to reach 60 billion kilowatt- hours, or 3 per cent of last year's total power consumption.

The government recently increased the electricity tariff to end- users to curb the use of power.

New generators with combined capacity of 130,000 megawatts are under construction, including generators of 37,000 megawatts that are to be put into operation this year.

The most up-to-date equipment and expertise in power transmission and distribution will be called for to ensure an effective power network, he said.

Siemens is not the only foreign company eyeing the huge market, but the company has forged a strong local system in the field, said Juergen Keese, general manager of Siemens Power Transmission and Distribution Group in China.

The newly-established automation company will serve as an important addition to the group's five companies already operating in China.

The group, covering the entire power chain from power generation to transmission and distribution, recorded a revenue of 465 million euros (US$558 million) in the 2003 fiscal year.

Keese said the establishment of the new company is the latest development of Siemens' 12-Point Programme for Profit & Growth in China, which was announced in May this year.

In the programme, the company aims to double today's sales of 4 billion euros (US$4.8 billion) in the next three to five years.

In order to reach these goals, Siemens plans to invest 1 billion euro (US$1.2 billion) in China during the next few years.

"The new company is a very visible sign of bringing this commitment to life and contributing to the Siemens' 12-Point Programme," Keese said.