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Videocon to set up base in China via fully owned arm

Partha Ghosh & Bipin Chandran

Consumer electronics major Videocon has joined the growing tribe of Indian business houses playing the China card to stay ahead of the competition including that from China.

Videocon International, the flagship company of the Rs 40 billion group, is setting up a wholly-owned subsidiary in China for manufacturing colour televisions and Internet-ready TVs.

The subsidiary has been christened Paramount Global Ltd and will be based in China's Shanghai special industrial area, said company executives.

Videocon group chairman and managing director Venugopal N Dhoot said that land has already been acquired in the proposed location of the greenfield manufacturing facility. Wholly owned subsidiaries are permitted in these special economic zones subject to 50 per cent export obligation.

"We have also received necessary clearances from government bodies last week," he said, adding, "The plant should be operational by March 2002." Dhoot said the plant will have a capacity to manufacture 150,000 units of Internet-televisions per annum. The initial investment proposed is $4 million, which will be increased as the business grows.

Videocon had earlier proposed to sell Internet televisions made in India in the Chinese market. However, it has changed its plans after it saw a huge cost advantage in manufacturing its televisions in China. The Chinese market can be exploited with cheap products, Dhoot said.

As per the agreement with the Chinese government, Videocon will have to sell 50 per cent of its goods in China and the remaining has to be exported. Dhoot said that Internet-TVs made in China and imported in India will sell here for Rs 14,000 compared to the existing price point of Rs 16,000 per set.

"Price of components is very low in China. We will get an enormous cost advantage. If we find that the import duties are low, we will increase out capacity and even think of assembling the TVs in India after importing kits from China," Dhoot said.

Videocon is already manufacturing Internet televisions at its Indian factories at Aurangabad. It is also manufacturing set-top boxes, which will convert CTVs into internet-ready televisions. The company sees a potential for Internet ready televisions in the country with several companies setting up their countrywide broadband network.

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