Tele-Shop decides to start selling electronic products

Taiwan Tele-Shop Co (台灣電店), a subsidiary of Taiwan Cellular Corp (TCC, 台灣大哥大), plans to begin selling consumer-electronics products, including digital cameras and personal digital assistants (PDAs) in its more than 200 retail outlets this year.

"Taiwan Tele-Shop is planning to transfer into a consumer electronics chain operator selling not only handsets but also other digital products," said Philicia Lai (賴怡璇), a public relations official at Taiwan Tele-Shop.

Established in 1998, Taiwan Tele-Shop has traditionally sold cellphones and accessories as well as Taiwan Cellular subscription services.

Taiwan Cellular controls over 50 percent of Taiwan Tele-Shop.

The company has mulled adding new products categories for several months, but has yet to finalize the launch date, Lai said.

Chinese-language media reported over the weekend that Taiwan Tele-Shop wants to sell tablet PCs and PDAs in its stores beginning in mid-January, quoting Anthony Yen (嚴宏圖), president of Taiwan Tele-Shop.

Taiwan has the highest mobile-phone penetration rate in the world at 100.7 percent in April 2002, according to the Ministry of Transportation and Communications. The high penetration rate is pushing Taiwan Tele-Shop to make the move.

"With public demand for new handsets or new mobile services declining, we need to expand our product lines to create sales," Lai said.

With nearly five years' experience as a handset retailer, Taiwan Tele-Shop already has sales know-how.

"Since mobile phone [sales are] similar to electronics products in terms of their short life cycle and the youth-dominated market, Taiwan Tele-Shop can more or less apply what they have learned to new products" said Wen Tuan-lien (文端廉), an analyst at Polaris Securities Co (寶來證券).

Another analyst was skeptical, saying the move may prove very challenging to Taiwan Tele-Shop.

"Being a successful and profitable retailer, the company has to set up an efficient distribution network or logistics system first," said Gary Lai (賴晴風), an analyst at Insight Pacific Investment Research (月涵證券).

The plan is unlikely to turn a profit in the short term, he said.

"I don't think that Taiwan Tele-Shop can remain profitable by competing with other well-established consumer-electronics retailers," he said.

Taiwan Tele-Shop's links with Taiwan Cellular have been a cash cow for the retailer over the last five years. According to Sunny Chou (周麗芳), a vice president at Taiwan Cellular, Taiwan Tele-Shop generated about NT$1 billion net profit in 2000, although that figure slid to around NT$300 million in 2001.