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China's Haier aims for 15% market share in India
By siliconindia
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Thursday, 15 April 2004, 19:30 IST
NEW DELHI: China's Haier, the world's fifth-biggest white goods maker, hopes to own up to 15 per cent of India's booming consumer-goods market and boost its fortunes in the face of cutthroat competition at home.
India's consumer goods sector, currently worth $4 billion, is growing robustly as an increasingly affluent 300-million-strong middle class snaps up appliances.
India is Asia's fastest growing economy, having expanded 10.4 per cent in the October-December quarter.
"We plan to contribute seven to 10 per cent to Haier's global turnover in six years time," Haier Appliances India president Tarun Kumar Banerjee told in an interview on Wednesday.
"That's at least a billion dollars and I reckon that our market share in India should be around 12-15 per cent down the line."
China's Haier group, which sells about half of its appliances overseas through retailers such as Wal-Mart, began selling air conditioners, washing machines, refrigerators, microwave ovens and televisions in India earlier this year.
"We can expect this market to double in the next five years," Banerjee said.
Haier, based in China's northeastern city of Qingdao, competes with the Indian units of South Korea's LG and Samsung Electronics, Whirpool, Philips and domestic firms such as BPL Ltd and Voltas Ltd.
Other consumer goods firms in the country include Sony, Hitachi and Electrolux AB.
Banerjee said Haier was expecting sales of Rs 3 billion ($68.5 million) in the first year in India where the firm plans to invest $12 million initially.
Haier plans to add mobile phones and computer monitors to its product offerings over the next few months.
RAMPING INVESTMENT
"We're seeing break-even in four years after taking into account very heavy investments in the third and fourth years in setting up manufacturing units, maybe in multiple locations."
As of now Haier is importing high-end fridges, televisions, air conditioners and washing machines from China, while some smaller televisions and fridges are being sourced locally.
Haier, whose overseas sales made up 14 per cent of revenue in 2003, has six plants in China and 13 abroad.
"Overseas sales for the group will continue to contribute higher and higher percentage because growth in the domestic market will slowdown due to high competition," Banerjee said.
High steel costs and an overcapacity-fuelled price war at home due have hit Haier's margins.
Banerjee said Haier, which has 18 design centres, was in the process of starting a product development unit in India to benefit from the country's skilled workforce.
"India has got such a vast pool of human resources that we thought it fit to bring in a development centre before setting up a manufacturing facility."