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AV Concept Holdings  is pursuing a major expansion drive for its MP3 business, with a view to penetrating new markets in Asia and Europe.
 The Hong Kong-listed firm, through subsidiary AV Concept Technology, is the developer and manufacturer of the iRiver and Sign MP3 player, as well as other digital audio devices made for various consumer electronics brands.
AV Concept chief executive Billy So Chi-on said the company wanted to accelerate the geographical marketing and distribution of its own MP3 brands through an international network of resellers.
Apart from the millions of MP3 players that it is slated to make for other consumer brands, AV Concept plans to sell about 50,000 of its new Sign MP3 products across Asia and Europe this year.
'I believe the MP3 market is still young and poised for further growth,' Mr So said.
The company set up its MP3 business in 1998 when the  devices started to emerge from the playrooms of technology hobbyists and to slowly enter the mainstream.
'One day, my father came up to me to ask what I thought of this new item called MP3,' Mr So said.
His father is AV Concept founder and chairman So Yuk-kwan,  who  wanted to turn around the fortunes of the company's then-struggling contract manufacturing business in the mainland. Mr So senior apparently saw some advantage in designing and building MP3 players using a new chip for these devices from Samsung. The Korean firm happened to be a close partner.
For more than 20 years, the AV Concept Group has been the largest distributor of Samsung semiconductors in China.
MP3 stands for Moving Pictures Expert Group 1, audio layer 3. It is a standard for technology and format for compressing a sound sequence into a very small file to about a twelfth of the size of the original file.
Using what it described as a shoestring budget, AV Concept formed a new business unit that looked into the opportunities in MP3 design and manufacturing. Mr So junior headed this outfit.
And the rest, as the saying goes,  is history. AV Concept secured its first contract manufacturing job in 1999, producing the Rio MP3 player. 
'So far, we have invested about HK$5 million into developing our MP3 business,' Mr So said.
The MP3 business accounted for 15 per cent of the company's  $1.77 billion annual revenue for the 12 months to March 31. Its factories in southern China produced almost 4 million MP3 players last year. 
The MP3 division, part of AV Concept's design and manufacturing business, also posted an operating profit of  $25 million for the year  to March 31 on a total turnover of  $287 million. That was an improvement from the  $5 million loss incurred from sales of  $357 million the previous year.
The company had also earned a windfall - a one-time net profit of  $76 million - when South Korean firm Reigncom was listed on the Kosdaq. 
AV Concept owns 12.4 per cent of Reigncom, which owns the iRiver brand.
But the company's main business remains the distribution of semiconductors, which represents about 70 per cent of its total revenue. 
Still, Mr So junior said future growth was expected to come from the MP3 market.
'We started ODM [original design manufacturing] just a year ago, and it grew from zero to  $200 million in a year.'
AV Concept's new Sign MP3 players will be targeted at  the premium market, where devices are priced between  $1,500 and  $1,900.



AV to drive MP3 sales