LinkTech plans $100m expansion
LinkTech International, a supplier of satellite car-navigation systems on the mainland, has budgeted $100 million for expansion as it sees strong demand for its products.
The company, which produces sophisticated auto-navigation devices using satellite-based global positioning system (GPS) technology for luxury cars, said changes in the behaviour of car buyers on the mainland had opened up a new business opportunity.
'This new business only began to take off last year. We expect to see a big jump this year,' said Chen Xiaoping, managing director and chief executive of LinkTech.
'Just three to four years ago, nobody thought China would have such strong demand for GPS auto-navigation applications. But suddenly, with people's higher income, more and more city residents can afford to buy not only cars but also devices to make their driving more comfortable and entertaining.'
According to ING Financial Markets, sedan sales on the mainland last year surged 75 per cent year on year to 1.95 million units, accounting for 44 per cent of total car sales.
The brokerage expects sedan sales of 2.8 million on the mainland this year.
Ms Chen said mainland sedan buyers were increasingly becoming like their Japanese counterparts in their preference for luxury and comfort. This had spurred demand for electronic gadgets such as GPS navigation devices, she said.
Ms Chen believes total demand for GPS auto-navigation devices for luxury cars - private cars selling from 200,000 yuan each - will top 500,000 units this year.
These devices are priced at US$500 to $2,500 each - 50 per cent less than what American carmakers are paying in the US.
'This is a HK$5 billion business. If we can get 10 to 20 per cent market share, it is already pretty good,' said Ms Chen.
After raising HK$200 million from a group of private investors four years ago, LinkTech launched its first auto-navigation product last year and quickly secured an order for 30,000 units from two carmakers.
According to Ms Chen, the company is in talks with several other carmakers for potential orders.
Due to intense competition in carmaking industry, Ms Chen said manufacturers had strong interest in GPS navigation devices as one way of beating their rivals.
Cars with GPS navigation devices could easily sell for 10 to 15 per cent more than those without the gadgets, she added.
LinkTech is in talks with several major domestic and foreign IT companies for a second round of financing to fund its expansion plan.
