Air conditioner business: Chinese company to invest $3.4 million

Organisation to set up two joint venture companies in Pakistan.

KARACHI:

China’s Hefei Meiling Company intends to invest $3.4 million to establish a joint venture with a local company to manufacture and distribute air conditioners, according to a statement released by the company.

Hefei Meiling’s subsidiary Zhongshan Changhong Electric Appliance Co will cooperate with Ruba General Trading FZE in Pakistan to establish two joint venture companies, one focusing on air conditioner manufacturing and the other on sales.

The company predicts that within next five years the manufacturing joint venture will be producing 157,600 units per year and sales revenue for two joint ventures will reach $19.86 million per year on average, with profit of about $219,800 per year.

“It’s a trend for many domestic home appliance companies to seek markets overseas, especially in South Asia,” Li Hui, a home appliance analyst from Southwest Securities Company, told the GlobalTimes.

Li said it’s easier to make a profit with air conditioners than other home appliances. The low cost of logistics, labor and transportation in South Asia, combined with strong demand given the high temperatures, makes for a growing market.

“With furious competition in domestic home appliance market, it’s a wise decision to look overseas,” Zhao Huizhi, a home appliance analyst with industry research institute CIC Industry Research Center, told Global Times. “Pakistan government is eager for foreign investment,” Zhao added.

Published in The Express Tribune, June 1^st, 2011.