TOKYO (AFP) -- European companies should use Japan as a base to develop the Chinese market, taking advantage of Japanese experience in running factories and joint ventures there, visiting French Economy and Finance Minister Francis Mer said Friday.

"To set up in Japan is to learn with the Japanese how best to succeed in China," Mer told reporters on a three-day visit to Japan to promote French scientific research and incentives to do business in France, before heading to Beijing Saturday.

Mer was accompanied by executives from seven large French companies, mostly in the hi-tech and telecoms sectors, including Alcatel and France Telecom.

The minister also noted Japan would not suffer from the emerging success of China as an economic power because Japan's role is indispensable in transferring technology.

"When you see the manner in which Japan and China are finding how they can complement each other, I don't have the feeling that the Japanese will particularly suffer from the development of China," Mer said.

China's development depends on building infrastructure and Japan is one of the world's three biggest makers of machinery, along with Germany and the United States.

Japan is thereby in a privileged position to contribute to China's enormous infrastructure needs, he said.

Major steelmakers Nippon Steel, JFE and Kobe Steel have reported sharp improvements in their earnings results in the six months to September, which they attributed partially to the expansion of the Chinese market.

Japan's trade surplus has been increasing in recent months and the Japanese finance ministry has noted China is one of the principal reasons for the gains.

Japan ran a trade surplus of 544 billion yen (5.0 billion dollars) with China, including Hong Kong, in the year to March, but had a trade deficit with mainland China.

For its part, China has become the largest exporter to Japan, replacing the United States, which had held the top position until the year to March 2002 since the end of World War II.

In the year to March, Japan imported 7.96 trillion yen worth of Chinese products, not counting goods from Hong Kong.

"Chinese production is now significant in terms of volume, not just growth rates," Mer said, adding his Japanese counterparts agreed with him during the visit that China is now a considerable engine of growth for Japan and other countries.

A month does not pass by without an announcement of a plant opening by a Japanese company in China or a tie-up to produce goods aimed at not only China's emerging middle-class but Japan and the rest of the world.

Japan's leading computer maker Fujitsu Ltd. announced in October the creation in Shanghai of a wholly owned subsidiary specializing in semiconductors. In the same month electronics giant NEC Corp. unveiled a plan in which it said: "We will make China the global production base of NEC's third-generation products."