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SCMP Reporter

Broadband-based audio, video and data services to be offered to consumers via worldwide network of partners

Royal Philips Electronics says Hong Kong is helping drive a key business revamp designed to boost its global sales.

Senior officials at the Dutch conglomerate, Europe's largest consumer electronics company, said its operations in Hong Kong were providing advanced products and technologies for the 'Connected Planet' strategy it unveiled last month.

The initiative involves the rollout of a wide range of broadband internet-ready audio, video and display products.

These will be jointly marketed with telecommunications network operators, online services providers and other partners of Philips worldwide.

It has put Hong Kong, the global headquarters for Philips' audio and mobile display business units, at the centre of a worldwide supply chain tasked with delivering products that enable consumers to access digital audio, video and data anytime and anywhere.

Gerard Kleisterlee, president and chief executive of Royal Philips Electronics, said he was confident of the capabilities of its Hong Kong operations.

'Faced with ever more agile competition, our solution is to seek greater flexibility and to create new market categories where we can exercise leadership,' he said. 'It is a delicate balancing act for us.'

For Philips, that means adapting design, manufacturing and marketing to local or regional conditions.

Achieving this flexibility is expected to yield savings of a billion euros (HK$8.6 billion) this year for the firm.

He credited Philips in Hong Kong, where the company has been doing business since 1948, with  increasing innovation to match that output of large rivals, such as Sony and Samsung, and smaller makers of low-cost, commodity electronics products.

Philips Audio  produces a range of consumer audio and video systems for the global market, such as portable CD players, MP3 players, DVD home entertainment systems and the new lines of internet-enabled audio products and  content services at the core of the company's Connected Planet strategy.

'Leading brands invest to create innovation, which in turn generates more widespread growth in an industry of 'me-too' players who can afford to be less innovative because we have broken the trail for them,' Mr Kleisterlee said.

Hong Kong is also Philips' Asia-Pacific headquarters for design and other product divisions, including domestic appliances and personal care, lighting and medical systems.

Cathode ray-tube maker LG.Philips Displays, a 50-50 joint venture with LG Electronics of South Korea, also has its global headquarters in Hong Kong. One in seven television sets sold worldwide contains a picture tube supplied by the company.

Murray Camens, vice-president at Philips Design, said many of the consumer electronics products to be released by Philips over the next several quarters were designed by its team in Hong Kong.

'We handle an average of about 600 design projects a year, including Philips' other product lines,' he said.

Philips also has two manufacturing sites, Electronic Devices  and Philips Light Factory, in Hong Kong.

With about 3,000 staff, Philips sales from Hong Kong reached about HK$42 billion last year.

Mr Kleisterlee said Philips, which had global sales of 31.8 billion euros (about HK$273.5 billion) last year, was upbeat about its prospects from next year after having endured slow sales, increased competition and painful corporate restructuring in the past  two years.

He said manufacturing or outsourcing of materials from low-cost areas such as China was a trend that would continue for all large electronics players.

'Philips does not have any drastic plans as suggested by recent news headlines,' he said, denying reports two weeks ago that the company would close a third of its existing 150 consumer electronics-related factories.

Philips has already shed about 50,000 jobs since 2001, leaving a global workforce of 164,000 - about 60,000 of which are in Asia.



HK driving Philips' global strategy