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Hisense Targets American TV Market With Mexican Factory

Hisense Targets American TV Market With Mexican Factory

Chinese electronics manufacturer Hisense Co. is doubling down on an investment in a Mexican factory as it grabs for a bigger slice of North America’s television market.


The Qingdao-based company, which also has operations in Africa and Central Europe, is part of a wave of Chinese companies—from electronics and auto makers to shoemakers and textile producers—that are increasingly looking to manufacture abroad. Rising costs in China have made factories in other markets more competitive. Chinese brands expanding globally are also opening regional manufacturing hubs to cut the time it takes to get goods onto store shelves.

Hisense will put an additional $30 million towards a plant in Rosarito, Mexico it bought from Sharp Corp. last year, said Jerry Liu, the company’s Americas CEO, who also led its effort to set manufacturing up in Africa. The company plans to enhance automation and increase production capacity manufacturing in Mexico, with a goal of shipping as many as four million televisions throughout North America a year, up from 1.5 million today. Hisense sells televisions including under the Sharp brand, through Wal-Mart Stores Inc., Best Buy Co., Amazon.com Inc. and others.

hisense television sharp chinese rosarito bajaThe Mexico expansion comes as manufacturing in China is getting more expensive, and slower economic growth is reducing domestic demand. That is pushing manufacturers from China to look to other emerging markets, as well as to the U.S. and Europe, for growth. Chinese companies completed a record $61 billion in acquisitions abroad in 2015, according to research firm Rhodium Group.

Labor costs are rising, and other factors are becoming more expensive, too—the cost of land, environmental compliance. They are facing a new reality and they need to adjust to stay in business,” said Thilo Hanemann, an economist with Rhodium. Chinese manufacturers “are being pushed out by a changing economic reality in the Chinese marketplace.

Chinese television makers are expanding overseas at a time when shrinking margins have forced established brands to exit the market. Companies like Hisense have proven willing to accept lower profits to gain market share, said Paul Gagnon, director of TV sets research at IHS Inc.

Their strategic goal overseas is to grow market share so there is a willingness at the corporate level to accept lower returns, he said.

Hisense surpassed Sony Corp. to become the world’s third-largest TV maker by unit shipments last year, but sold just 2.8% of televisions purchased in North America, according to IHS. This is set to grow in 2016, as the company has been licensing Sharp’s brand name since January, analysts say. Sharp sold 2.1% of TV sets in the region in 2015. Samsung Electronics Co. is the market leader in the region, with a 28.7% share.

Hisense has said in the past that one of the challenges of expanding abroad is finding enough workers with the right skill set. But Mr. Liu said wages for line workers in China have risen to roughly equal to those in Mexico. And with advances in automation, the company, which has 13 factories world-wide, including nine in China, employs around 500 workers in Mexico who produce 200,000 units a month. Previously, it took 800 workers to produce less than half that amount, Mr. Liu said.

Shipping a finished television from Mexico to the U.S. cuts up to a month of travel time compared with moving that same unit from a Chinese factory, Mr. Liu said. Speedy delivery is becoming more important as major U.S. retailers hold less inventory, requiring more frequent orders with manufacturers.

Companies with the capability to deliver products quickly will have a “real advantage,” Mr. Liu said. And “in the U.S. market for the long-term, retailers cannot continue doing business with too much inventory; it’s too risky.”

Source: The Wall Street Journal by Loretta Chao

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Co-Production International, Inc. Administrative Service Provider San Diego, California

ico flag usaUSA Corporate Office
Ph: 619.429.4344 / 855.480.0837
8716 Sherwood Terrace
San Diego, CA 92154 USA

ico flag usaMéxico Corporate Office
Tel.: 664.454.3330
Boulevard Agua Caliente 4558
Int. 701, Colonia Aviación
C.P. 22014, Baja California
info@co-production.net

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Av. Benito Juárez 1102 Col. Centro
Piso 4 Torre Sur, Oficina 432
Monterrey, Nuevo León 64000, Mexico
info@co-production.net

ico flag usaUSA Corporate Office
Ph: 619.429.4344 / 855.480.0837
8716 Sherwood Terrace
San Diego, CA 92154 USA

ico flag usaMéxico Corporate Office
Tel.: 664.454.3330
Boulevard Agua Caliente 4558
Int. 701, Colonia Aviación
C.P. 22014, Baja California
info@co-production.net

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Av. Benito Juárez 1102 Col. Centro
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