TCL-Rechi fully loaded with orders for ompressors to be filled in 2005

Taipei, Dec. 23, 2004 (CENS)--TCL-Rechi (Huizhou) Refrigeration Equipment Co., Ltd. Recently announced it has seen orders fully booked for refrigeration compressors to be shipped in 2005 from the mainland's top-five air-conditioner manufacturers, including Haier Group, TCL Group, and Meadi Group.

Based in Huizhou, Guangdong Province of the mainland, TCL-Rechi is a joint venture between Rechi Precision Industry Co., Ltd., Taiwan's largest manufacturer of refrigeration compressors and the TCL Group, one of the mainland's top-five manufacturers of air conditioners. Currently Rechi Precision holds a 77.8% equity stake in TCL-Rechi and the TCL Group obtains the remaining 22.2%.

Thanks to the inflow of the big-ticket orders, Huizhou has become Rechi's most important production base of compressors in the mainland. With the big-ticket orders, TCL-Rechi estimated it would see shipment double to five million refrigeration compressors in 2005 from this year's projected goal of 2.5 million units.

C.H. Yuan, president of TCL-Rechi and vice president of TCL Group, said TCL-Rechi would vertically integrate its compressor product line by developing upper- and downstream products. For instance, the company has recently installed precision-grinding facility to boost production of refrigeration compressors.

At present, one-third of TCL's ordered compressors are delivered by TCL-Rechi.

C.H. Yi, general manager of TCL-Rechi, said mainland China has become the world's largest production center for air conditioners with annual output of 45 million units, but supply of compressors, the engine for air conditioners, amounts to less than five million units per year. Accordingly, the compressors produced by TCL-Rechi are warmly welcomed in the mainland.

Yi noted his company would commence mass production with its precision-grinding facility by the end of this year. The new facility will be able to roll out two million pumps used in compressors in 2005. Because of the mass production of the precision-grinding facility, TCL-Rechi estimated it would increase annual output by two million compressors in 2005.

As integrated production is expected to save the costs in customs duties, administrative fees, transportation, packaging and labor wages, TCL-Rechi projected it would save annual production costs by 40 million renminbi with gross operating margin rate reaching 25% in 2005.

In addition to increasing production in the mainland, Rechi Precision will also install one more compressor production line in Taiwan sometime next year. The new line will help Rechi Precision increase its annual output by 1.5 to two million compressors to reach 10 million units in 2005, ranking the firm among the world's top-three manufacturers of the product. Moreover, the company is prepared to set up a plant of motors used in refrigerators, in Taiwan in the near future.