Tsann Kuen announces plans to expand in China

Tsann Kuen Group (燦坤), Taiwan's largest electronics chain store in terms of annual sales, said yesterday that it intends to expand its presence in China's burgeoning electronics and home appliance market.

The company also plans to develop its original equipment manufacturing (OEM) business, through which it produces products that Taiwan's branded home appliance enterprises sell under their own brand names. Tsann Kuen will decrease production of its own brand, Eupa.

"Eyeing the estimated 7-percent GDP growth in China," said Wu Tsann-kuen (吳燦坤), the group's founder and chairman,"and the 30-percent increase in the electronics and home appliance market there, we plan to expand to over 100 outlets in China in 2004."

"By expanding our OEM business, we want to provide more products to our clients and utilize our strengths to help Taiwanese brands make inroads into China's market," Wu said.

Tsann Kuen has set up a 1.6 million square meter factory in Fujian Province's Zhangzhou. The plant is capable of churning out 500,000 small home appliances a day.

The company manufactures products for many international branded companies, including the US clients George Foreman Grill and Starbucks. The company is also working on signing OEM contracts with Taiwanese home appliance brands like Tatung Co (大同).

"We aim to create annual sales of NT$80 billion in 2004 and NT$400 billion by 2009, with 1000 outlets on both sides of the Taiwan Strait," Wu said.

The group generated a turnover of NT$37 billion in 2003, an increase of about 40 percent compared to the previous year.

It hopes to expand its number of outlets to more than 160 in Taiwan and 100 in China's eastern and northern regions by the end of this year.

The NT$230 billion market in Taiwan has encountered stagnant growth recently, while China is growing due to strong first-time purchases of electronics products, said Richard Yu (余敬倫), CEO at Tsann Kuen's retail business.

An analyst said that the group was right to emphasize its OEM products.

"Even spending a huge amount of money to advertise its own brand might not assure Tsann Kuen of the ability to compete with renowned international companies," said Chen Yen-liang (陳彥良), an analyst at Yuanta Core Pacific Capital Management (元大京華).