Home-appliance maker Gzitic Hualing Holdings' sales surged 99.94 per cent in the first half this year due to price cuts of between 4 and 12 per cent and government measures to stimulate domestic demand. Hualing initiated the March-April price-cut to increase domestic market share. Chairman Chen Xiaoshi said there was keen competition in the mainland's household electrical-appliances market and many players reduced prices to expand their market share. Guangdong Kelon Electrical Holdings, another major player in the industry, had earlier said its interim results might be lower than market expectations due to cut-throat competition. Mr Chen said Hualing's air-conditioner manufacturing operation could maintain its net profit margin of about 8 per cent because the increased production volume and lower costs could compensate for reduced profit. He said moves to raise production efficiency helped the company tide over the price increase of imported raw materials. In the first six months, Hualing's air-conditioner sales rose 81.53 per cent over the same period last year to 254,000 units, while refrigerator sales surged 116 per cent to 350,400 units. The company expects its air-conditioner operation's gross profit margin to fall from 38.68 per cent last year to 31 per cent due to increased exports and more original equipment production for other brand names. Mr Chen said Hualing would seek growth by increasing exports and exploring the mainland rural market. The company will spend 80 million yuan (about HK$74.9 million) to double air-conditioner production capacity to one million units to meet expansion targets. The funds will come from internal reserves and a bank loan.