Proton in China television joint venture

Taiwan's Proton Electronic Industrial Corp (普騰) said yesterday it was forming a digital television joint venture with China's No.3 computer maker, Tsinghua Tongfang (清華同方), to tap into the world's fastest-growing TV market.

Proton, a leading TV brand in Taiwan, is scheduled to sign an agreement with the Beijing-based computer vendor on Thursday to sell its own-brand digital TVs to Chinese households, Sylvia Lin (林曉薇), an assistant supervisor at Proton, told the Taipei Times yesterday.

"We hope the new entity will start to operate some time soon," Lin said. She declined to comment on a Chinese-language media report that the deal was worth US$20 million.

She said the two sides had initially agreed to sell TVs under the joint brand of Tsinghua Tongfang Proton, giving Proton access to the world's most populous market.

The new venture is expected to ship the first batch of TVs during the first half of next year from a factory in Hanzhou, Lin said. The factory will be able to produce 3 million sets a year.

China has become a priority market for Proton and its Taiwanese rivals such as Sampo Corp (聲寶), not only in terms of manufacturing but also of market access, analysts said.

Sampo signed an agreement with Haier (海爾), China's largest home-appliance maker, in February 2002 to sell each other's products and to respect each other's original equipment manufacturing ventures.

"Proton's move is the latest by local TV makers to aggressively expand to overseas markets, especially China," said Helen Chen (陳佩君), a home appliance analyst at Polaris Securities Group (寶來證券). "The deal will create a win-win situation for both sides."

The demand for flat-screen TVs in China is expected to hit 2.05 million this year, or one-fifth of the global demand of 10 million units, according to a research report released by the Taipei-based Topology Research Institute (拓墣產業研究所) in January.

The growing demand for high-resolution TVs is a result of Beijing's plan to start extensive digital broadcasts by 2010, the research house said.

Tsinghua Tongfang's move comes following announcements by its bigger rival, Legend Holdings Ltd (聯想), and US computer giants Dell Inc and Hewlett Packard Co that they were entering the flat-panel TV market, said Chris Lee (李俊毅), an analyst at Topology.

Taiwanese TV makers have been the top choice for Chinese PC makers and home-appliance vendors, but local companies had been reluctant to work with Chinese firms before.

"Now the situation has changed as those Chinese brands have evolved into big names in the TV sector," Lee said.