Focusing on the fast-growing Chinese market, Japan's Toshiba and major Chinese appliance maker TCL have signed a broad agreement to cooperate in making and marketing appliances in China, the companies said yesterday.
The companies will set up two joint ventures, one for manufacturing and one for marketing, said a statement from Toshiba Consumer Marketing Corp, a wholly owned Toshiba unit formed in October last year to oversee the group's consumer electric appliance operations.
"Our aim is to build up our business and expand our productive capacity to reach a broader market in Asia as well as the fast-expanding consumer market in China," the statement said.
For Toshiba, a partnership with TCL, based in southern China's Guangdong Province, offers cost advantages, strong distribution and a top brand name inside China, Toshiba said.
The agreement marks another breakthrough for TCL, which has been seeking strategic partnerships with leading international companies.
Last year, TCL announced a joint venture with Thomson SA, the French company that owns US television brand RCA. It also has a mobile phone handset joint venture with France's Alcatel SA.
Toshiba Corp and TCL plan to build a 5 billion yuan (US$605 million) refrigerator and washing machine factory, with production to begin in early 2006, Toshiba said. Initial annual output of 700,000 refrigerators and 300,000 washing machines will eventually be raised to 2 million refrigerators and 1.5 million washing machines, it said.
Toshiba Consumer will take a majority 70 percent stake in the manufacturing joint venture with TCL holding the other 30 percent. TCL will take a majority 51 percent stake in the marketing joint venture and Toshiba Consumer will take the remaining 49 percent.
Toshiba hopes the venture will boost its share in China's appliance market to 10 percent from the current 1 percent, the Japanese newspaper Nihon Keizai Shimbun reported.