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World Cup - when bigger is better

Besides beer and chips, what else do you need for the perfect World Cup viewing experience?

How about a 42-inch (107cm) television set with full surround sound?

For Wiebo Vaartjes, a senior executive at Philips Electronics, the world's biggest sporting event means a big and welcome spike in sales of televisions.

Sales of the company's TVs and home theatre audio systems usually rise by up to 40 per cent before World Cups and Olympic Games, he noted.

'People want to watch the World Cup matches with better pictures and better audio quality,' said Vaartjes, chairman of Philips Electronics Hong Kong and senior vice-president and general manager of audio-video and multimedia. 'This leads them to switch their TV sets.'

Vaartjes, who is in charge of the group's global television and audio-video products, is responsible for sales in a large part of the globe, including China, India, Brazil, Britain, North America, Argentina, Spain, Italy, Russia, Turkey, Poland, France, Germany, and Northern Europe and the Benelux countries.

'These countries represent 80 per cent of our total sales of televisions and audio-video products,' he said. 'They have big populations and have a high GDP growth. When people become wealthier, they demand higher quality television and audio-visual products.'

He notes customers from different countries have different viewing demands. 'Many houses in the US and Europe have bigger living rooms so they want bigger screens and louder speakers,' he notes. 'In China and Hong Kong, many families live in smaller spaces and that is why the best selling TVs are smaller and audio not as loud.' He added that some TVs could be as wide as 100 inches but the best sellers in Hong Kong and China are only 42 inches.

TV sales were also linked with audio systems as people who have a big new TV set also want a good hi-fi or home theatre sound system.

Netherlands' born Vaartjes, 56, started out in a career that had nothing to do with television or light bulbs. His first job was as a seaman.

'I wanted to see the world so I became a sailor as a teenager. But the problem is that when you are on a ship all you see is the sea and not the world,' he laughs.

He quit ships to go to university. After graduating in 1977 from the University of Leiden with a degree in social studies followed by an MBA degree from Interfaculteit Bedrijfskunde Delft in 1979, he joined a pharmaceutical firm. Then in 1985 he jumped ship to Philips, a move that allowed him to fulfil his boyhood dream of seeing the world.

'Philips is an international company which has allowed me to travel around the world,'' he said.

Since 1989, he has been located outside the Netherlands as head of different factories or offices around the world including Belgium, Austria, Malaysia and Hong Kong. During that time he headed teams ranging from 10 to 2,500 people.

He took up his current role as global head of the audio-video division in July 2006. A father of four he is fluent in English and German and speaks some French.

Philips is the largest provider of lighting markets but also has a lot of consumer and audio-video products. Do you have too many business lines?

In the past decade, Philips has restructured to simplify its business to three major areas - lighting, health care, and consumer lifestyle which includes the entertainment, television and the audio-video products. Globally, sales are 24 billion euros a year, which is equally split among the three businesses. We believe the current structure allows us to be focused and to achieve higher growth.

Philips has been promoting environmental friendly lighting for some time but critics say while they save energy they lead to more pollution when disposed of.

Energy-saving lighting uses about 60 per cent to 70 per cent less energy compared with traditional lighting. The energy saving value is huge. We have improved the products to prevent pollution when they are disposed of. In fact, if people dispose of them in a responsible way we can prevent the impact of the pollution.

Besides lighting, how is Philips promoting environmental concepts?

We make products that are smaller and which need less material and less space for shipping. We make them low-power consumers and packed with recycled material. We hope 50 per cent of products could be labeled as green products in five years, up from abut 30 per cent now. Customers now expect electronic products to be environmentally friendly so the green concept is not a sales gimmick but a necessity.

Who are your target clients?

For lighting, the big tickets are governments, hospitals and companies. For medical health care, the major customers are hospitals. For the television and audio-video products, the major customers are families who want good picture quality television and good hi-hi. There are also younger people who like to buy trendy AV products.

Do customers' taste changes with time?

In the old days, people would watch TV and enjoy music at home. Now, they are more on-the-go; they like to listen to music and watch movies when they are travelling. We have to design products to meet their need.

But there are some demands which remain the same. Customers always want something which is designed smaller, lighter, easy to install and operate. They prefer television sets they can install by themselves with no need for a technician. They want a Blue Ray where you only need to plug in one cable. Simplicity is always the key of success in the consumer market. This reflects in our product design and packaging.

Who are your major rivals and how do you fend-off competitors?

It varies with different product lines. For lighting, GE is our major competitor. For medical products, GE and Toshiba are the major competitors. For consumer products, it's Braun, Samsung, Sony and Apple. We compete with them by offering customers a simple design and package and make sure they match with their tastes. We have always done product surveys to find out what people like or dislike in a product and make improvements based on that.

What are your best sellers and have any been considered a flop?

The current best sellers are the Blue-Ray players, the energy saving lamp and medical equipment for small hospitals. Traditional light bulbs are selling less and less and now represent fewer than 10 per cent of all lighting sales.

I do not recall any products that have been considered flops as we do research and customers testing to make adjustments before any launch. Sometimes we decline to make a product if we believe the profit margin will be too thin.

In the internet era, does technology help to sell your products?

The internet is getting more and more important. There are increasing numbers of products being sold through the internet, especially smaller items. For big-ticket items, people do some research on the internet and then buy in shops.

More importantly, the internet and social networking websites such as Facebook or individual's bloggers have become an important source of information about electronic products. When people want to buy a television or a Blue Ray, they discuss it with friends on Facebook to check quality and price. They are relying less on marketing or advertisements. As such, we have to make our website very informative.

How do you compare the market to when you first joined Philips in 1985?

When I first joined Philips, there was no mobile phone or internet. We could only communicate with overseas colleagues by fax. To make a long-distance call was expensive so we were prohibited from doing so.

The televisions we sold were big boxes and people still listened to LPs as the CD had not yet appeared. Then LPs were replaced by CDs, and big box televisions were replaced by flat screen TVs. Then came DVD players and Blue Rays. The computer was up and coming in the 1980s.

You have been in Hong Kong since 2004. What do you like the most about the city and what do you like the least?

Hong Kong is a great place to work and to live. It is full of energy and there are a lot of entertainment choices and sport. This is an exciting city where I never feel bored. The setback is I have to fly too much and cannot stay in the city long enough. Sometimes I have to travel three weeks in a month out of Hong Kong. I would like to stay home as much as possible with my wife. My children are all studying or working overseas.

Do you only use Philips products at home?

I use Philips products whenever I can but sometimes I use other brands to see what our competitors are doing.

You have been keen on promoting environmental protection - do you adopt the same practices at home?

I use energy saving lamps, sort the rubbish by putting it into different bins. I will also make sure I switch off air conditioners and lights before I leave home.

Do you have any hobbies?

I like sport. I play tennis and have a sailing boat. I am also learning to play golf. But I only do all this for leisure not for competition as my work is stressful enough.

What do you want to do in 10 years time?

I will stop working for Philips but I will not retire. I may contribute my time and knowledge to charity organisations or doing something in small business. I would like to stay in Hong Kong as I really like the life in this city.

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