The Electrolux Group, the world's largest producer of household electrical appliances, plans to directly source US$50 million worth of components and parts from Taiwan next year, a company official said yesterday.
"To reduce costs and enhance competitiveness, we decided to increase procurement in Asia to US$400 million next year from US$300 million this year," Jay Cheng (
Cheng was in town to brief local prospective companies on Electrolux's outsourcing policy at the Taipei International Convention Center.
Electrolux, a Sweden-based electronic giant, has acquired several big-name household electric appliances including White-Westinghouse, Frigidaire, Gibson, AEG and CHEF, which collectively account for 85 percent of the market in Europe and North America and created an average annual revenue of US$14 billion.
The company's Asia IPO headquarters are in Hong Kong, and it opened the Taiwan IPO branch early this year.
Cheng said the company initially plans to farm out US$50 million worth of orders in Taiwan and up to US$200 million in China.
"While the procurement quota here is still small, we will gradually raise it from the current 5 percent to 10 percent [of procurement in Asia] in the next two years," he added.
The company currently procures some simple and labor-intensive parts from China, while outsourcing mechanical, electric, chemical and tooling components with higher sophistication and innovation from Taiwan, according to Cheng.
Local component suppliers expressed great interest in working with Electrolux, with more than 300 local companies meeting Cheng and other Electrolux IPO officials yesterday in Taipei, said Philip Huang (
"Although the [Electrolux] brand is not well-known in Taiwan, it has large market share with quality products, so I hope we can become one of their business partners," said Mary Wang (王碧偵), vice president of Boomster Corp (旋邦公司), an electronic component company in Taipei.
In addition to taking advantage of cheaper quality resources in Asia, Electrolux also plans to expand its market share here, which is currently 5 percent.
"The massive Chinese market, where we have established two factories, is definitely a target for us," Cheng said.
When asked if Electrolux could compete with comparatively low-priced Japanese brands such as Sony, Hitachi and National that have been prevalent in Taiwan, as well as many other Asian countries, Cheng said high quality is the major appeal of its products.
"On average, Japanese products tend to malfunction after three years of use, while our products are proved to operate as new ones after being put to use for eight to nine years," Cheng said.
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