Taipei Times: Is Sampo Corp (
Ho Heng-chun (
PHOTO: KEVIN CHEN, TAIPEI TIMES
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 (
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 (
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.
Sampo will take a different approach. We already have an intensive distribution network around the nation and the leading technologies in consumer electronics. What we should do now is to have a strict cost control.
Now we are integrating the supply of key components including connectors. If this integration is completed, we will be able to reduce costs by about 10 percent. We expect the integration to be done within two years.
TT: Why are rookie TV makers able to compete with the TV-industry veterans?
Ho: Take Sampo. We are a TV veteran and have developed our own technologies to produce televisions with high quality since the analog era. One of the most complicated technologies we own is producing TV tuners, which are compatible with different standards adopted by most European countries. In other words, consumers do not have to change TV sets when they move across the Euro zone. This is one of the key technologies we rely on to compete with new entrants from the IT sector.
In Europe, only a few TV brands are capable of providing such compatible TV sets; these include Royal Phillips Electronics, Thomson and Grundig. South Korean consumer electronics giants Samsung and LG are unable to provide such TV sets, let alone Taiwanese companies.
BenQ Corp (
IT companies like BenQ will take some time to grab a share of the digital TV boom, which is mostly expected in 2006. But I doubt consumers will have patience for this inconvenience.
TT: We've heard that some China-based Taiwanese companies plan to make loans from local lenders' offshore banking units to cope with Beijing's credit curbs, which are part of its measures to cool off the overheating economy. Is Sampo under similar pressure?
Ho: We do not expect to experience any serious impact from those measures. We believe Beijing is clamping down on excess domestic investments, not export-oriented companies.
Our Chinese lenders have assured us that the hundreds of millions of yuan designated for us will by no means be reduced.
In addition, we allocated US$9 million for expanding a freezer plant in Tianjin, which is expected to be completed by the year's end. In two years after this completion, our annual output will double to one million freezers from the current 500,000.
Unlike China's Haier Group (
TT: Taiwan Semiconductor Manufacturing Co (
Ho: Chinese officials have assured us that they plan to completely lift power-rationing measures by 2004's final quarter, and said that the problem will be fully resolved after several new power plants are completed next year. They said the severe shortage is a result of heavy power consumption by aluminum and steel mills, which already top Beijing's list of excess investments to be curbed. We're told that export-oriented plants will enjoy preference in allocation of the power supply, while local factories and households will face immediate power disruptions.
Thus we believe electricity constraints will only have a minor impact on our production. The situation is not as bad as we had thought previously.
To cope with power rationing, we already adjusted our day and night shifts. Three years ago we bought two power generators for emergency use. We don't feel the need to increase power-generating facilities.
TT: IT manufacturers are recruiting technology researchers from traditional TV vendors. What measures will Sampo take to keep talent from leaving?
Ho: We will follow suit by giving stock to researchers, as most Taiwanese IT companies have been doing in recent years, in order to keep them with Sampo.
Additionally, we're turning to China for product researchers and engineers, as it is really difficult to recruit professionals in TV design and manufacturing here. Star industries like semiconductors and flat display panel companies have lured most of the talent with good pay and handsome year-end bonuses.
To solve this problem, we decided to set up a research and development center in China, where the TV business is thriving with big vendors such as Haier and Konka Group (
TT: Where's Sampo's China R&D center to be located?
Ho: It will be somewhere close to Suzhou or Shanghai. We expect the project to start this year. In fact, Sampo has been providing scholarships to Tianjin University and Soochow University students since seven or eight years ago. We hope the collaboration will bring more talent to Sampo.
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