Whirlpool enters China with joint ventures in microwave ovens and refrigerators

Business Wire, Dec 7, 1994

BENTON HARBOR, MICH.--(BUSINESS WIRE)--December 7, 1994-- Whirlpool Corporation (NYSE:WHR) said today that it was entering the fast-growing home appliance market in the People's Republic of China with two joint ventures. The company is acquiring a majority interest in the country's largest microwave oven producer and establishing a joint venture in refrigeration with the first company to manufacture refrigerators in China. Whirlpool also said that negotiations with manufacturers for washing machines and for compressors were progressing smoothly and could result in joint venture agreements in early 1995.

MICROWAVE OVENS

In the largest agreement signed today, Whirlpool will acquire a majority position in SMC Microwave Products Co., Ltd., an existing joint venture with revenues of about $100 million. Current partners Shell Electric Manufacturing (Holdings) Company, Ltd., and Shunde County Beijiao Economic Development Company, a local government- owned enterprise, will hold minority stakes in the new joint venture company.

The company currently holds about half of the rapidly expanding Chinese microwave market, which totals about 500,000 units, and exports more than half a million units to other Asian, European and Latin American markets from its factory in Shunde, Guangdong Province, near Hong Kong. Whirlpool expects the joint venture company's manufacturing volumes to reach about 1.5 million units by 1997.

This transaction will vault Whirlpool into the top five microwave oven producers worldwide.

REFRIGERATION

The other joint venture, signed Monday, links Whirlpool with Beijing Snowflake Electric Appliance Group Corporation, a state-owned and highly integrated enterprise comprised of the Beijing Refrigeration Factory, the Beijing Compressor Factory and the Beijing Plastics Products Factory, one of China's largest plastics producers. The company has been producing refrigerators since 1956 and also produces some room air conditioning units.

The new joint venture company will be known as the Beijing Whirlpool Snowflake Electric Appliance Company, Limited, and Whirlpool will hold a majority position in this joint venture company for refrigerators, the first involving a Western partner in China. Currently, Beijing Snowflake's refrigeration operations, which largely supply northern China, produce about 120,000 units, including freezers. Additional manufacturing capacity is now under construction, and Whirlpool expects to increase volume to about 500,000 units over the next two years.

Both joint ventures are now subject to government approvals and to approvals from the companies' boards of directors, which are expected to follow shortly.

OTHER DEVELOPMENTS

Whirlpool also said that its Brazilian affiliate, Embraco S.A., one of the world's largest compressor companies, has signed an initial feasibility study with Beijing Snowflake and hopes to finalize a joint venture agreement in early 1995 to produce compressors. Embraco would have a majority equity position, and Whirlpool a minority position in the joint venture company with Snowflake, thus assuring Whirlpool a local quality supply of a key component for refrigeration manufacturing.

Whirlpool also said that it had signed a letter of intent to study the establishment of a joint venture with Beijing Snowflake to produce air conditioners.

Finally, the company noted that ongoing negotiations with the Shanghai Narcissus Electric Appliance Corp., Ltd., a leading manufacturer of washing machines which has produced 1.3 million units this year, were progressing smoothly and are expected to result in a joint venture agreement in early 1995. The two companies signed a letter of intent to establish the joint venture in August.

David R. Whitwam, Whirlpool chairman and CEO, said this historic entry into China reflected the company's aggressive approach to expansion in the rapidly growing Asian region.

"We believe the opportunities in China are enormous," Whitwam said, "and we have found excellent partners to work with in this growing market. Chinese consumers already purchase about 20 million appliances annually, nearly 40 percent of all appliances sold in Asia. Within 10 years we expect that the China market alone will equal or surpass the entire North American or European marketplace. Clearly, having a significant presence in China is a key element of our global growth strategy."

Whitwam said the announcements culminate a year of aggressive actions and strong commitments in Asia. In August the company signed a $100 million joint venture agreement with Kelvinator of India, which, pending final government approval, will give Whirlpool a majority position in one of India's leading refrigeration producers. The company also increased its holdings to a majority position in the TVS Whirlpool Ltd. joint venture in India to produce and market laundry products, opened additional representative offices in Shanghai and Guangzhou in China, and restructured its Asian operations into four operating regions. Whirlpool Asia now has a marketing presence in 12 countries and a headquarters and product engineering and design center in Singapore.