THE acquisition of major state-owned factories has brightened the prospects for Shell Electric, allowing it to gain immediate access to the lucrative China market.
The company has bought 12 state enterprises from Guangdong Huabao Corp, which should enable its earnings to grow quickly.
Guangdong Huabao is a renowned state enterprise with well-established distribution channels throughout the country.
Notwithstanding the property development venture - Shunde Huabao Real Estate Industrial Corp - the other 11 businesses involve the manufacture of air-conditioning equipment, electric lighting fixtures, aerosol cans, ceramics, household appliances, nylon fabrics, packaging materials and electronic consumer products, offering a synergy to Shell's existing manufacturing business.
Shell Electric began making microwave ovens in the territory in 1983. In the past decade this division has expanded rapidly and is expected to overtake electric fans as the company's core business.
In 1987, Shell set up a factory in Shunde, Guangdong province, as part of a broad expansion plan and it is now the largest maker of microwave ovens in China. With the growing affluence of mainland Chinese, sales are burgeoning.
This favourable sales trend clearly indicates the product will replace fans as the group's best-selling item in 1994 and beyond. At present, China accounts for about 20 per cent of microwave oven sales.