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Buyer Community> Trade Intelligence> News> Whirlpool held Hefei Sanyo after multiple serious losses in the Chinese market
Source: Appliance World Expo Appliance World Expo

Whirlpool held Hefei Sanyo after multiple serious losses in the Chinese market

Published: 01 Sep 2013 21:32:52 PST
On August 13, Hefei Rongshida Sanyo Electric Co., Ltd (Hereinafter referred to as Hefei Sanyo) announced that, Whirlpool Corporation will become a majority shareholder in Hefei Sanyo after it spends more than RMB 3.4 billion to purchase 51% of shares in the latter via equity transfer and directional private placement with Sanyo Electric (China) Co., Ltd. And the listed corporation will be renamed Whirlpool Rongshida (China) Corporation Ltd, with its second largest shareholder-Hefei State-owned Assets Holding Co., Ltd, which was the largest shareholder in Hefei Sanyo previously, now accounting for 23.34% of the shares.
  
As one of the Fortune 500 enterprises, Whirlpool Corporation is the world`s leading manufacturer and marketing forces in home appliance industry. Through the transaction, a Whirlpool Corporation subsidiary, Whirlpool (China) Investment Co., Ltd will integrate innovative technologies, excellent products and high-quality services in Whirlpool Corporation with rich marketing and operation experience of Hefei Sanyo in local market to make new Hefei Sanyo a leading enterprise in China with a strong domestic marketing capability and cost-effective production platform.
 
Meanwhile, Whirlpool Corporation and Hefei Sanyo have inked in the Agreement on Avoiding Horizontal Competition saying that the former must only outsource all the business that Hefei Sanyo is capable of now or in the future to the latter. In addition, the microwave oven business will be integrated into the new Hefei Sanyo. And Whirlpool Corporation said it will arrange for the 50% equities in Hisense Whirlpool (Zhejiang) Appliance Co., Ltd properly.
  
The majority of assets from Whirlpool Corporation via private placement will be utilized to enhance home appliance sector in Hefei Sanyo. According to plans from Hefei Sanyo, the RMB 1.986 billion will be invested in the projects of improving technology and expanding the 10 million annual output of variable frequency motor and control system, 5 million annual output of technology improving on frequency conversion in washing machine, and 4 million annual output of energy-saving, environmental-friendly high-end refrigerator.
  
Whirlpool Corporation expects that this transaction will be accretive in the first full year of integration. “Whirlpool has a strong presence in China`s medium and high tier segments, and the acquisition allows the company to build on, complement, and grow its position in the emerging Chinese market and to leverage our global enterprise for greater efficiencies,” said Jeff M. Fettig, CEO and Chairman of Whirlpool Corporation.
  
Michael Todman, president of Whirlpool International, said: “Hefei Sanyo has established a nationwide distribution platform, a scaled manufacturing presence with opportunity for growth, and is ideally located in Hefei, a recognized appliance hub in China. Hefei Sanyo is a well-managed, profitable business with great prospects, led by an experienced and capable executive team with a track record of delivering strong performance.”
  
In recent years, Hefei Sanyo has gained impressive growth. In 2012, the revenue of the company is RMB 4.016 billion, up from RMB 0.635 billion in 2007, with the compound annual growth rate of 44.63%. Its net earnings hit RMB 304 million in 2012, up from RMB 68 million in 2007, with the compound annual growth rate of 34.89%. At present, Hefei Sanyo leads the domestic market in washing machine and microwave oven.
  
However, Whirlpool Corporation has experienced many tough moments in China. It is reported that, as early as 1994, Whirlpool Corporation had set foot in the Chinese market. From then on, it had jointed or cooperated with many Chinese enterprises with an aim to have a foothold in many home appliances, including refrigerator. It is a pity that all of its efforts did not pay off.
  
In 1997, the joint venture Whirlpool Xuehua (Beijing) Electrical Appliance Co., Ltd., which was established by Whirlpool Corporation and Beijing Xuehua Electric Appliance Group Corp. in 1995, closed down;
  
After many years of serious losses, the joint venture Whirlpool Narcissus (Shanghai) Co., Ltd. founded by Whirlpool Corporation and Shanghai Narcissus Electronic Appliance Manufacturing Co., Ltd. in 1995 fell apart in 2002 after Whirlpool purchased all of its equities;
  
In 1995, Whirlpool Corporation jointed with Shunde Sienhua Electric Appliance Co., Ltd. The former spent huge sums to buy 65% of the latter`s shares, and then the rest 35% of shares. However, the company failed to hold on its performances in China with seldom products sold in the Chinese market now;
  
In 1997, Whirlpool declared that it would quit Chinese market;
  
In 2002, Whirlpool showed up in the Chinese market once again with 30 new kinds of products in 3 series. However, a few years later, they only do washing machine business, with all the refrigerator and microwave oven business pulling out of China;
  
Founded In 2005, the Whirlpool Corporation subsidiary- Whirlpool (China) Investment Co., Ltd., expanded the product categories, covering washing machine, refrigerator, built-in kitchen appliances, with washing machine and refrigerator products the focus in the Chinese market.
  
In 2008, Whirlpool strengthened its efforts to cover air-conditioner, heater, refrigerator and kitchen appliance in its category; until now, its presence in China is still to be felt.
  
And now in 2013, Whirlpool Corporation pour EMB 3.4011 billion to buy 51% shares of the Hefei Sanyo, and Hefei Sanyo will be renamed Whirlpool Rongshida (China) Corporation Ltd.
 
According to some insiders, the cooperation between Whirlpool Corporation and Hefei Sanyo will prosper, as the integration of internationalized platform in Whirlpool and local home appliance shares in Hefei Sanyo will bring in a win-win situation. However, some insiders expressed concerns that the new company will be in a mess. Whirlpool Rongshida (China) Corporation Ltd. contains four brands: Sanyo, Royalstar, Diqua, Whirlpool after the acquisition. The top priority task for the new company is to determine the market position of the four brands, with the fact that Sanyo brandname right will come to expiration soon, Royalstar has suffered from being marginalized for many years, the new brand Diqua develops fast but with a weak base and Whirlpool is known around the world with a weak presence in the Chinese market.
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