Sampo chief looks forward to a clear picture

Taipei Times: Is Sampo Corp (聲寶) still looking for another Grundig to fulfill its dream of selling own-brand products in Europe despite the US$100-million buyout plan being aborted at the last minute?

Ho Heng-chun (何恆春): Yes, we're still looking for new opportunities, though there are not many options out there since China's TCL Group purchased French TV brand Thomson AG.

But we don't regret the decision to drop the deal with Grundig. Big names like Grundig are certainly attractive, but the stakes are too high.

The deal fell through after German banks changed their tune, declining to underwrite loans for Grundig. Without these funds, the troubled Nuremberg-based consumer electronics maker, which needed 100 million euros a month to turn around, could have depleted Sampo's financial resources in just a few months.

Though the merger plan ended fruitlessly, it made Sampo a household name in Europe. It usually costs a lot for no-name Asian vendors to get known there.

TT: Will Sampo take more aggressive steps to expand its own-brand business this year after it makes substantial profits by supplying Gateway Inc of the US and Thomson AG with plasma display panel (PDP) TVs?

Ho: We will only sell our own-brand products here in Taiwan. As of 2004's first quarter, we grabbed about a 60 percent share of the nation's PDP TV market and a 25-percent share of the liquid crystal display (LCD) TV market.

Outside of Taiwan, Sampo is an original equipment manufacturer for multinational consumer electronics vendors. Sampo will stick to this strategy even when collaborating with Chinese home appliance giants. We primarily produce PDP TVs for our customers.

Our reason for doing so is that we want to avoid the kind of flop suffered by local computer brand Acer Inc a few years ago. [Acer announced it was spinning off its manufacturing arm, Wistron Corp (緯創), in late 2000 in order to ease its OEM customers' concern about helping a PC competitor.]

TT: When will you be ready to distribute your own-brand products abroad?

Ho: At the moment, Sampo is not ready to expand its brand-name business to overseas markets. Sampo does not have idle money to spend on costly marketing, inventory buildup and absorbing bad debt, which are the problems faced by most brand operators. When Sampo gets stronger, we will evaluate brand strategies for various markets.

In North America, price is the deciding factor for people's purchases, not brand. In contrast, European consumers tend to be more loyal to brands they are familiar with.

TT: Will Sampo consider setting up a separate company to sell own-brand flat-screen TVs, like crystal display panel makers Chi Mei Optoelectronics Corp (奇美電子) and HannStar Display Corp (瀚宇彩晶) have?

Ho: As computer profit margins shrink, Taiwan's component providers have to expand to new growth areas, such as the fast-growing digital TV market. They're making consumer electronics products now; this is probably one of the ways that will get them out of the woods.

Those component makers usually get control over key components and panels, and so they naturally think about selling own-brand products. That strategy might prove to be working. But one thing they don't quite understand is that the deployment of an adequate distribution network is time-consuming, and they don't have that kind of network right now.