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Konka Secures Partner to Raise Output

Konka Group Co. (000016.SZ), one of China's top three television makers, is close to finalizing a deal with a foreign partner that will sharply raise its output. "An agreement will be signed by the end of August at the earliest," a spokesman at Konka said Tuesday. The official in the firm's multimedia development department, who declined to be named, added the prospective foreign partner was a listed company. He didn't identify the firm.


The official said the deal would help Konka expand its annual TV production by 50 percent, with annual sales of TVs expected to rise to 15 million units from 10 million units currently.


The deal is also expected to help Shenzhen-based Konka expand outside its home market and in the competitive home-appliance market.


The official said Konka began talking to many potential foreign partners, including France's Thomson SA (TMS), a year ago.


Late last year, however, the French company and a unit of TCL Corp. (000100.SZ), Konka's domestic rival, said they would form a television joint venture.


Gu Qing, an electronics sector analyst at Haitong Securities in Shanghai, said Konka's potential deal is positive for the Chinese firm.


"Taking on a foreign partner is a smart move because it gives Chinese TV makers more options when it comes to trade disputes," Gu said.


This year the United States imposed antidumping tariffs on more than US$276 million worth of color TV imports from China, the world's largest television maker. Konka and TCL were among the manufacturers affected.


Shares in Konka rose 1.3 percent to end at 6.13 yuan Tuesday. Last week, Konka said its first-half net profit rose 40 percent year on year to 42.5 million yuan. TV sales made up 70 percent of its revenue in the period.


(Shenzhen Daily August 19, 2004)


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