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Haier's Net Profits Down 35.2%
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China's electronics maker Haier announced in a recent annual report that the company's net profit dropped 35.2 percent to 239 million yuan in 2005.

 

This was in sharp contrast with two other electronics makers Midea and Gree in China

 

Gree reported a 21.11 percent rise in net profits to 510 million yuan last year, while Midea said its net profits hit 382 million yuan, a growth of 11 percent, according to a report published by the 21st Century Business Herald on Friday.

 

Officials from Haier Electronics Group Co. attributed the falling profits to the rising cost of raw materials and tough competition.

 

In order to reverse the downward trend, Haier has decided to cut the company's spending on marketing refrigerators and air conditioners.

 

This would help increase Haier's sales income by 370 million yuan, the annual report said.

 

Chen Gang, an analyst with Orient Securities, pointed out that Haier must increase investment to win the battle with competitors.

 

Haier's overseas sales income grew 51 percent last year, accounting for 31 percent of the company's total. However, the export has been affected this year with the implementation of new European technical criteria.

 

Haier invested 150 million yuan to renovate projects according to European technical standards and another 80 million yuan to build research and development centers in the United States and Europe in 2006.

 

(Xinhua News Agency May 9, 2006)

 

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