Rechi expanding cooperation with TCL

Taipei, Nov. 7, 2003 (CENS)--Rechi Precision Co., Ltd., a subsidiary of the Sampo Group, will expand cooperation relations with mainland China-based TCL Group. Rechi is Taiwan's largest manufacturer of various kinds of compressors.

Recently, Rechi president Lee Wen-chin has flown to the mainland for talks with TCL vice chairman H.C. Yuan to grab more orders from the latter. It is expected TCL will double its orders to 600,000 air compressors for delivery in the firm's current fiscal year ending June next year.

Rechi posted NT$2.25 billion (US$66.17 million at US$1:NT$34) in sales revenue and NT$196 million (US$5.76 million) in pretax earnings for the first three quarters of this year, reaching 82% of its financial projections for the entire year. Thanks to the brilliant performance, the company will have great chance to raise its annual financial projections for this year.

Over the past several years, Rechi has been very aggressive in deploying the mainland market by supplying air compressors to the Haier Group, the mainland's largest home appliance manufacturer. The company boasted it would provide one million air compressors to Haier in the current fiscal year ending June next year.

Rechi said its cooperation with TCL and Haier will expand further in the foreseeable future. The company has received orders for 4.5 million air compressors from TCL and Haier for shipment in the current fiscal year ending next June.

As the No.1 manufacturer of cell phones and No.2 producer of television sets in mainland China, TCL is making all-out efforts to venture into the production of air conditioners. As air compressor is the core component of air conditioners, Rechi will make TCL an important strategic partner to enter the massive mainland market.

Rechi has cooperated with TCL to set up a joint venture in Huizhou of Guanddong Province. Rechi holds a 78% stake in the new company with the remainder going to the mainland partner. The new venture is capable of rolling out two million air compressors per year.

Rechi has also set up a wholly-owned subsidiary in Dongguan, Guanddong Province, which has an annual production capacity of 1.2 million motors and 1.2 million air compressors.

In addition, Rechi has set up a 50-50 joint venture company in Dongguan with the U.S.-based General Electric. The venture currently has an annual production capacity of 4.8 million motors.

Rechi said it has received orders for 4.5 million compressors slated for delivery in the current fiscal year, up 46% from last year's 2.7 million. The company originally estimated it would receive orders of four million compressors for shipment in current fiscal year.

In the current fiscal year, the company has also received orders for 450,000 from the U.S.-based Whirlpool and 1.1 million from Fedders of the U.S. At present, the company has commanded a 10% share of the markets for compressors for air conditioners in the U.S., mainland China and Taiwan.

With production deployment across the Taiwan Strait, Rechi now can cut production costs by 10% per year. Thanks to the full run of the production facilities across the Taiwan Strait, the company is quite optimistic about its operations next year.