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Greencool, a privately owned Chinese home appliance giant, said that it aims to export half of its total refrigerator output next year as part of efforts to increase its presence in the international market.
The Hong Kong-listed company expects to sell 10 million refrigerators next year, according to Greencool Chairman Gu Chujun.
Five million refrigerators worth US$500 million are planned for export next year, Gu said.
"We will have to not only compete in the domestic market generally but be aggressive overseas to fulfill the ambitious total sales target," he said.
"Exporting is one of the best ways for Chinese refrigerator makers to balance market risks at home and abroad," he said.
Gu said Greencool's refrigerator export volume reached US$250 million last year, up from US$110 million in 2002.
"We report bumper profits from our refrigerator exports through our cost-cutting efforts, although international refrigerator prices are on the downward trend," he said.
"We will further cut costs and expand production capacity to strengthen our advantages in the international market," Gu said.
The tycoon hoped to double Greencool's annual production capacity to 20 million refrigerators by 2007 through acquisitions and mergers.
Over the past two years, Greencool has merged a number of domestic refrigerator makers, such as well-known Kelon from South China's Guangdong Province and Meiling from East China's Anhui Province.
However, Greencool currently operates as an original equipment manufacturer in its international dealings.
"In the international market, we do not use our own brands because we currently have no capabilities to build our own sales and service networks," Gu said.
Greencool will probably sell its own brands abroad when its exports reach US$1-1.5 billion, he said.
The company now has four refrigerator brands Kelon, Meiling, Ronshen and Combine, which control 40 percent of the domestic market.
China's refrigerator industry suffers from seriously redundant production capacity.
Total refrigerator production capacity in China reaches 25 million units a year, but annual domestic sales only stand at some 10 million units, according to statistics from the Development Research Center under the State Council, China's cabinet.
There are more than 30 refrigerator plants with over 20 brands across China.
Refrigerator prices have been declining in China in recent years as a result of market oversupply.
"Reshuffling is badly needed for the fragmented refrigerator industry," said Zhang Wenkui, an expert with the development center.
"Foreign refrigerator giants appear to be unaccustomed to market conditions in China. Greencool could take the lead in the expected industry reshuffle according to the current development," Zhang said.
Many foreign big names, such as German Siemens, Electrolux of Sweden, Japanese Toshiba, and Samsung and LG of South Korea, have already built refrigerator manufacturing bases in China.
But they are only targeting the high-end segment in China, accounting for a small proportion of the total domestic refrigerator market.
"We now have no competitors in real terms in China's medium and low-end refrigerator market as we have controlled almost all of the production lines in the segment and we have cut costs to very low levels," Gu claimed.
Medium and low-end refrigerators will continue to account for the bulk of the total refrigerator market in China in the coming years, he said.
Greencool, a freon-free refrigerant maker in the past, has also entered into China's booming auto industry by acquiring a floundering state-run bus company in Jiangsu Province in the east.
At the end of last year, Greencool bought a 60.67 percent stake in Yangzhou Yaxing Motor Coach Co Ltd, which runs a joint venture with Mercedes-Benz of German-US auto giant DaimlerChryler.
"The auto industry will be a new growth engine for Greencool and we have opportunities in it," Gu said.
"But it will not be an easy job to play in the industry because we are a newcomer," he added.
(China Daily April 5, 2004)
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