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GOME Electronic Appliance Co Ltd, China's largest home appliances retailer, has ignited a price war in the nation's high-end colour TV market.
The company purchased 1 million TV sets last Thursday.
A company official said last week at a China Colour TV Summit in Beijing that it would buy 1 million colour TV sets from 18 manufacturers ?including domestic giants Changhong and TCL and international firms Toshiba, Matsushita and Philips ?for 3.2 billion yuan (US$387 million).
Sichuan-based electronic appliance maker Changhong was the biggest winner ?supplying about 600-million-yuan (US$72-million) worth of TV sets while LG will supply 263-million-yuan (US$32-million) worth of TV sets.
"We will shift our market position from low-end products to middle and high-end TV sets,?said He Ju, the retailer's purchasing manager for Southern China.
GOME plans to sell 2 million TV sets next year, and high-end products are expected to account for half, said Li Juntao, the retailer's purchasing manager for northern China.
Sales of colour TV sets are expected to reach 6 billion yuan (US$725 million) next year, Li said. GOME sold 2.7-billion-yuan (US$326-million) worth of TV sets in the year's first 10 months.
"The average price of TV sets has been dropping, but high-end product prices have been rising,?Li said.
"That's why we want to be a leader in the high-end market.?
GOME last week slashed by 10 per cent in Beijing the prices of the 100 models of TV sets it had bought. The TV sets include traditional CRT (cathode ray tube) models, plasma TV sets and LCD (liquefied crystal display) projection models.
Officials from GOME, also China's largest handset retailer with monthly sales of 100,000 units, said at the summit the company would soon start purchasing mobile phones, refrigerators and computers to initiate other price wars.
"If professional retailers like GOME challenged the distribution channels of electronic appliance makers in past years, it would have been able to replace those channels in 2003,?said Luo Qingqi, an expert in China's home appliance market.
Huang Guangyu, president of GOME, said his company will expand its chain store network next year from 140 shops to 200 stores. The company's revenues are expected to double to 20 billion yuan (US$2.4 billion).
The privately held GOME had planned to list on Hong Kong's stock exchange, but delayed its initial public offering due to the poor performances of some private enterprises on the market. Some insiders suggest the company will list after the Spring Festival (February 1) next year.
(Business Weekly December 17, 2002)
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