China’s TCL, Egypt’s Elaraby set up TV plant for Middle East and African markets
Chinese TV maker TCL Multimedia has teamed up with Egyptian consumer electronics distributor and maker Elaraby Group to capitalise on growth in emerging markets amid a slowdown at home.
The Chinese company, controlled by TCL Corp, which produces and distributes a wide range of products from consumer electronics to home appliances and smartphones, has set up a joint-venture company with Elaraby Group, which will have a 70 per cent stake in the venture.
A TV production plant will be set up in Egypt under the partnership to tap the market potential of the Middle East and Africa, said Liang Tiemin, general manager of TCL’s strategic consumer business unit.
“[This is] a move of strategic importance to upgrade TCL’s industrial layout,” Liang said.
The total investment for the first phase would amount to US$2.4 million (HK$18.6 million) that will be spent on boosting productivity, he said.
Elaraby’s diversified product lines and extensive sales channels would help TCL to expand sales in the Egyptian market, Liang said.
“The annual production capacity of the plant will reach 3 million sets that will be sold to African and nearby countries, TCL-branded TVs will account for 500,000 units,” said Wang Yi, chief financial officer of TCL.
The combined potential TV demand in the Arab, African and the Mediterranean free trade zone is estimated at about 20 million sets a year, the company said.
“Japanese brands’ share in these regions is shrinking, we should seize the opportunity and boost our market share,” Wang said.
Liang said TCL is targeting a 10 per cent market share in the next few years.
Cairo-based Elaraby is a leading player in African and the Middle Eastern market that distributes and makes audio and visual products from smart TVs to HiFi systems, while also covering home appliances and other consumer electronic products.
TCL’s LCD TV sales overseas in the first four months of the year increased by 7.4 per cent to 2.6 million units, growing at a faster pace than the China market, which posted a 3.4 per cent sales increase to 3.2 million units.
In April, LCD TV sales in China increased by 3.6 per cent, while overseas sales jumped 37.4 per cent from the same period last year.
The growth in overseas sales was driven by the North American and emerging markets, Everbright Securities said in a report.
Chinese consumer electronics firms have been looking to expand overseas markets. TV maker Skyworth CEO Yang Dongwen recently said the company would accelerate overseas expansion as the period of rapid growth in China was over. Skyworth has set its sight on emerging markets like South Africa and set up production lines there.
The promising growth in consumer electronics demand in emerging markets has attracted China’s homegrown smartphone markers as well.
Xiaomi took its first step into the Middle Eastern market in January with Dubai-based distribution partner Task Fzco. The Chinese company has also introduced a wide range of products from smart TV and routers to air purifiers in that market.