TCL, Egypt's Elaraby to set up TV production plant

Factory will supply growing African and Middle East markets

TCL Multimedia Technology Holdings Ltd, the Chinese TV maker, is to set up a joint production base in Egypt with local home appliance leader Elaraby Group, in an effort to tap into African and Middle East markets.

The first phase of the venture is expected to be operational by 2017 and will become the largest Chinese-invested LCD TV production base in North Africa, said officials.

Its $2.4 million cost is being split 30/70, with the Egyptian firm spending the greater.

Signing a memorandum of understanding in Shenzhen on Thursday, TCL officials said the plant's annual TV output will reach 2 million sets over the next five years.

The Chinese firm is the largest domestic TV exporter to Egypt, while Elaraby is its country's largest home appliance company.

"The factory will supply African and Middle Eastern markets and allow TCL to ensure stable orders, via Elaraby's well-developed sales network," said Liang Tiemin, general manager of TCL Multimedia's strategic customer business center.

Mohyielden Elaraby, the company's chief sales officer, said he is confident the partnership will expand its sales network and increase its market share.

Liang added that TCL expects the venture to lift its annual TV sales in Africa and the Middle East to at least 3 million sets over the coming three years, 500,000 of which will be sold under the TCL brand.

Despite TV sales stalling in China, the United States and Europe, TCL is optimistic about its prospects in Arab, African and Mediterranean countries, with data from market researcher GfK suggesting combined demand still exceeds 20 million sets per annum.

Michael Wang, TCL Multimedia's chief financial officer, said trade agreements between Egypt and its neighboring countries would also help TCL boost sales.

Additionally, the Egyptian government gives export tax rebates to companies that produce at least 40 percent of its components on home soil.

Owned by TCL Corp, TCL Multimedia set up its first overseas TV production base in Vietnam in 1999, and now generates nearly half its revenue overseas.

The company also has a major production base in Poland serving Europe, and one in Mexico feeding products into North and Central American markets.

In an interview late March, TCL Corp's Chairman and CEO Li Dongsheng revealed the company is considering other production bases in India and Brazil.

Liang Zhenpeng, a consumer electronics analyst, said demand for LCD TVs in emerging economies in Asia, Africa, Latin America and Middle East remains strong and is expected to continue growing over the next 3-5 years.

"The process of changing cathode ray tube TVs into LCD TVs has just started in many emerging countries, so Chinese TV makers can still generate business growth there, while domestic demand eases and even when it starts shrinking," Liang said.

"Chinese TV exports are still mainly sold under foreign brands, so domestic makers have to learn from their competitors in Japan and South Korea and increase the proportion of exports under their own brands, to strengthen their bargaining power globally."

xujingxi@chinadaily.com.cn