Wo Kee Hong seals mainland venture

WO Kee Hong (Holdings) has signed a 50-50 joint-venture agreement with Jiangmen Washing Machine Factory to make washing machines and air-conditioners.

The new company, Jun Ling Electrical Co, will also sell, market and service washing machines and air-conditioners, as well as the related components and spare parts.

Jun Ling, which involves an investment of about 263.5 million yuan (about HK$237.15 million), will have a term of 30 years from the date the company receives its business licence.

Wo Kee Hong's core business is the distribution of audio-visual products and air-conditioning systems.

Company chairman Lee Wing-sum said the joint-venture company would serve as a base for further business associations with key suppliers.

The associations might include technology transfer and further joint ventures, he said.

The group would also expand its air-conditioning and electrical appliance businesses not only in China but also in markets such as Hong Kong and elsewhere in Southeast Asia.

Jiangmen's capital contribution to the joint-venture company will be land-use rights, factory and other manufacturing facilities.

Wo Kee Hong's wholly owned subsidiary, Metro Global, will inject 131.75 million yuan into the joint venture.

Wo Kee Hong will provide the funds for Metro's stake in the venture.

Jiangmen, which has been operating since 1983, owns an established manufacturing operation with an extensive nationwide customer base and distribution network.

It has about 600 sales and after-sales service points in China.

Wo Kee Hong directors said the joint venture was an attractive investment for the group to strengthen its distribution network and business in China.

They said the group would expand its air-conditioning and electrical appliance businesses not only in China but in other markets.