Toshiba reaffirms link with China Digital

PUBLISHED : Monday, 10 November, 2003, 12:00am
UPDATED : Monday, 10 November, 2003, 12:00am

Japanese electronics conglomerate Toshiba has reaffirmed its relationship with sole China distributor Digital China Holdings, despite launching its own sales office on the mainland.

'In China, Digital China is our only PC distributor. We have good relations with Digital China and there is no reason to drop our business with them,' said a Toshiba spokeswoman at the company's Tokyo headquarters, easing concerns the pair's eight-year relationship might be coming to an end.

Toshiba's recent move to set up a Shanghai sales and marketing office sparked worries the Japanese electronics giant might begin selling its products directly in China, contributing to a 15 per cent decline in Digital China's share price over the past three weeks.

Toshiba said the purpose of its new Shanghai sales office was to reinforce its marketing capabilities the mainland.

'The purpose of establishing a Shanghai sales office is to enhance our marketing capabilities and expand sales of Toshiba-brand PCs in China together with Digital China,' the Toshiba spokeswoman said.

Main board-listed Digital China is the mainland's largest distributor of information technology products, and Toshiba notebooks account for a significant portion of the company's business.

According to Digital China's listing prospectus, its partnership can end with just 30 days' notice by either party. Having suffered a net loss of 32.18 billion yen (HK$2.27 billion) for the six months to September, Toshiba is hoping to turn itself around by expanding its operations and production capacity in the mainland.

'China is among the largest overseas markets and a major production base for Toshiba,' the spokeswoman said.

Toshiba, which invested a total of seven billion yuan (HK$6.5 billion) in China so far, said it would expand production capacity of its mainstay notebook PCs in China by 70 per cent within the next six months. The Japanese electronics product maker said it would boost monthly output at its Hangzhou plant from 70,000 units to 120,000 in the second half of this financial year.

Toshiba is forecasting China sales at about 500 billion yen - or about 9 per cent of its projected net sales revenue of 5.65 trillion yen - for this financial year.