TCL, Eastern Group co-develop Taiwan household-appliance market

Taipei, April 26, 2004 (CENS)--Mainland Chinese household-appliance maker TCL Group began selling its products in Taiwan through the Taiwan-headquartered Eastern Group's retail network late last week, posing a threat to Taiwan's household-appliance suppliers.

TCL is among the mainland's top three household-appliance suppliers, with revenue topping 28.2 billion RMB (US$3.4 billion at US$1:8.2 RMB) and forecast to reach 70 billion RMB (US$8.5 billion) next year.

The Eastern-TCL cooperation deal is expected to unnerve the island's household-appliance suppliers because it is the first case that a mainland supplier in this industry sells its products through a TV shopping retailer--Eastern Group's Eastern Home Shopping Network-- in Taiwan. The mainland's No. 1 player Haier contracted Sampo, a leading Taiwanese household-appliance supplier, to sell its products on the island; and its revenues from Taiwan market have been flat as its products have never been promoted on local media.

TCL will first focus on Taiwan's air-conditioner market after entering Taiwan. Soon, the two companies will expand cooperation items to include multimedia and communications products. The Eastern's retail business is expected to see revenue hit record high this year partly because of the cooperation deal.

TCL was listed on the Shenzhen Stock Exchange early this year. It is running the mainland's largest TV business and the mainland's third-largest handset business. Its air-conditioner business is the mainland's 15th-largest.

Eastern Home Shopping has recently developed strong presence in the mainland. The company's subsidiary has acquired the mainland's first license to operate international logistic business in the mainland. The retailer expected its mainland operation to rake in total revenue of NT$6.3 billion (US$191 million at US$1:NT$33) and earn NT$150 million (US$4.5 million) throughout this year, compared with its overall projection of NT$13.9 billion (US$421 million) in revenue and NT$2.2 billion (US$68 million) in profit at home and overseas combined. It planned to boost its mainland revenue up to NT$9 billion (US$272 million) next year.

The Eastern-TCL deal suggests TCL is expanding cooperation ties with Taiwanese suppliers in order to enhance its competitiveness, according to Taiwanese industry analysts. Before Eastern, Sampo had become a TCL contact partner by securing its orders for 40,000 to 50,000 plasma display panel (PDP) televisions and 100,000 refrigerators throughout this year.

TCL and a Sampo affiliate already co-opened a compressor venture in Guangdong. The joint venture planned to ship two million compressors by the end of this year, with 600,000 of them going to TCL's appliances.

TCL acquired television unit of French household-appliance giant Thomson last year, making it the world's largest TV supplier with annual shipment of 20 million systems.

TCL's deal with Sampo, currently the world's third-largest supplier of built-to-order PDP TVs, will benefit Sampo, which is expected to see PDP-TV shipments double to 200,000 systems this year from last year because of the cooperation.