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March 19, 2012

Household appliances producers are expanding product range

By DAVID TAN
davidtan@thestar.com.my

Pensonic Holdings Bhd, Daewoo Electronics (M) Sdn Bhd and CT Frank Technology Sdn Bhd are among the companies that are investing to produce a new range of products this year.

Pensonic Holdings Bhd, Daewoo Electronics (M) Sdn Bhd and CT Frank Technology Sdn Bhd are among the companies that are investing to produce a new range of products this year.

Pensonic is injecting about RM30mil to start construction of a new corporate headquarters that would house a research and development centre on a 2.4ha site in Bukit Minyak Science Park this year. Yoo says the company’s new range of refrigerators and washing machines are targeted at new markets such as Ukraine, Vietnam, Myanmar, and Cambodia.

Daewoo Electronics is investing about RM50mil for an assembly cum warehouse facility, also in the Science Park, while CT Frank is spending RM5mil to acquire raw materials for new household electronic products. Daewoo Electronics, one of South Korea's leading consumer electronic product company, has a plant in Sungai Petani, Kedah. Daewoo Electronics managing director Y.J. Yoo said the company's assembly and warehouse facility, scheduled to start operations by end of this year, would produce new range of refrigerators and washing machines. “These are targeted at new markets such as Ukraine, Vietnam, Myanmar, and Cambodia. We can expect the Ukrainians to source a lot from us, as China-made refrigerators and washing machines entering Ukraine are now subjected to a 150% duty.” The company's washing machine and microwave oven exports totalled only 160,000 units in 2011 compared with about 240,000 in 2010due to the floods in Thailand, The company's sales would pick up this year due to replacement orders this year, he said.

These new markets and the replacement orders from Thailand should help Daewoo Electronics achieve a US$20mil (RM60mil) revenue in 2012, compared with US$10mil (RM30mil) in 2011, Yoo added. Chew: ‘We expect to start construction work in the next three months.’ Daewoo's overseas sales accounted for about 70% of its 2011 revenue, while the domestic market made up the remaining 30%.

Pensonic managing director Dixon Chew said although the domestic and overseas markets were affected by the global economic challenges, the group was going ahead with its new headquarters and research and development centre. “We expect to start construction work in the next three months. The project is expected to be completed in the second quarter of 2013.” The research and development centre would develop new eco-friendly household electronic appliance products such as the eco-thermal pot, which allows energy savings of up to 50% for the overseas and domestic markets, he said. Chew said domestic sales, which contributed about 70% to the group's annual revenue, slowed down after January, while overseas sales, which comprised 30% of the annual revenue, reported a double-digit growth due to demand from South-East Asia, Asia, and the Middle-East. “They provided steady demand for innovative products that are competitively priced,” he said. For the group's third quarter in fiscal year 2012 that ended in February, it expected single-digit growth in sales, compared with the previous fiscal year's corresponding quarter.

CT Frank chief executive officer Beh Cheng Siong said the company would spend RM5mil this year for raw materials to manufacture jug kettle, shower heater and smart televisions with touched screen features.

“These are high-yielding products for the domestic market, which would help the company increase its 2012 sales revenue by 20% from RM60mil in 2011.” The new products, to be assembled at its plant in Taiping, would help offset the margin erosion from the LCD television sales segment.

“This year, we will also produce 300,000 units of cathode ray TVs and LCD TVs for both the domestic and overseas markets in emerging economies such as the Middle-East and Africa compared to 250,000 in 2011,” Beh said. The Middle-East market generates about 40% of CT Frank's revenue, while South- East Asia and Africa contribute 20% and 40% respectively. Saudi Arabia serves as a distribution hub for the company's products in the Middle East. CT Frank manufactures from a 120,000 sq ft facility in Kamunting Industrial Estate, employing 250 workers.

Meanwhile, Star Electronics Sales and Services Sdn Bhd managing director Joseph Hon said the local consumer electronic product retailing sector was still running short of washing machines and refrigerators due to a disruption in supply from the floods in Thailand. “The disruption is caused by the Japanese brand washing machine and refrigerator manufacturers in Thailand supplying to the local market where there is a need to replace household appliances damaged by the flood,” he said. Hon said there was plan to open three more sales outlets in the northern region this year to add to the existing 20 outlets on Penang island, Seberang Prai, Kedah, and Perak.

Meanwhile, the latest Business Monitor International report released last month forecast that total retail sales in the country would increase from US$57bil in 2012 to RM70.5bil in 2016, fuelled by low unemployment rate, rising disposable income and a strong tourism industry. Consumer electronic product sales are predicted to rise from US$11.47bil in 2012 to US$14.44bil in 2016, an increase of 25.8%, boosted by demand from the tech- literate urban middle class, and by a growing interest in electronic products from the under-penetrated areas outside the Klang Valley.