China Hefei Meiling Company intends to invest $3.4 million to establish joint venture with Pakistani company

Karachi: China’s Hefei Meiling Company intends to invest $3.4 million to establish a joint venture with a company in Pakistan to manufacture and distribute air conditioners, according to a notice 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 Global Times on May 30, 2011.

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

Meiling is not the first company of its kind to invest overseas. Chinese Home appliance giant Haier Group established an industrial district in Pakistan early in 2001. Zhuhai-based Gree Electric Appliances Inc began developing a manufacturing base in Brazil in 2001, followed by another one in Pakistan in 2006, and in Vietnam in 2008.

“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 Centre, told Global Times. “Pakistan government is eager for foreign investment,” Zhao added.

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