Sampo Group aims to rank among world's top 3 air compressor makers

Taipei, Feb. 17, 2004 (CENS)--Sampo Group, one of Taiwan's leading manufacturers of home appliances and heavy electric machinery, aims to become one of the world's top-three manufacturers of air compressors in three years.

Rechi Precision Industry Co., a subsidiary of Sampo Group, confirmed having received orders for 1.2 million air compressors from mainland China's Midea Group, which will be shipped beginning from July. Rechi is currently the world's fourth largest manufacturer of air compressors and Midea is mainland's second largest maker of air conditioners. Air compressor is the major component of air conditioner.

Rechi president Lee Wen-hsiung said his company has seen a full production capacity for the 2004 fiscal year ending June 30. The company has begun receiving new orders for the 2005 fiscal year and some world-renowned makers of air conditioners, including mainland's Haier Group and TCL Group, are rushing to increase orders.

Sampo chairman Felix Chen said Rechi plans to cooperate with a mainland firm to set up a joint-venture plant for the production of air compressors in Qingdao of Shandong Province by the end of this year. With the launch of the plant, Rechi will have a combined annual production capacity of 10 million air compressors in three years, ranking among the world's top-three makers in the line.

There is a rumor that Rechi will cooperate with mainland's Haier Group to set up the joint-venture plant in Qingdao, but Chen wouldn't release details concerning the establishment of the proposed plant. With total investment of US$15 million, the plant will initially have an annual production capacity of 2.5 million air compressors.

Chen said air compressor is one of the most-competitive product lines of his group. Thanks to the substantial sales growth of the product line over the past several years, Sampo has seen insufficient production capacity for the product. In addition to expanding production capacity and implementing a work-shift production, the group has cooperated with the mainland's TCL Group to set up a grinding plant for the production of pumps in Huizhou of Guangdong Province. The grinding plant is expected to begin pilot production by the end of this year.

Rechi received orders for five million air compressors in 2004 fiscal year that began in July 2003, half of which coming from the mainland. The company said one million air compressors of the 2004 orders came from Haier, 600,000 from Midea, and more than 400,000 from the mainland's second-tier home-appliance firms.

Midea vice chairman H.P. Fang recently led some high-level staff to visit Sampo and placed orders with the Taiwanese firm for 1.2 million air compressors to be shipped in the 2005 fiscal year, double that of the previous fiscal year's level.