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Troubled Chinese refrigerator maker Guangdong Kelon Electrical Holdings Co. received a cash infusion of 600 million yuan (approx. U.S. $74.1 million) from Hisense Group, according to a China Daily report. New parent Hisense provided the funds to help Kelon stay in business.
Kelon, based in the southern Chinese city of Foshan, told the Shenzhen stock exchange, "Kelon cannot get new bank loans." It also told the exchange that, with Hisense's help, Kelon will sell off 1.4 billion yuan (approx. U.S. $173 million) worth of products by March, 2006.
As APPLIANCE reported on September 12, Hisense purchased a 26.43-percent stake in Kelon from Gu Chujun, Kelon's jailed former chairman and controlling shareholder, now the target of a criminal investigation.
Kelon, maker of refrigerators and air-conditioners, was plagued by scandal, lost sales, and manufacturing shutdowns in recent months. The problems arose primarily from accusations that fraud and embezzlement were committed by high-level Kelon executives, most notably Gu Chujun. An ensuing halt to supplier deliveries caused manufacturing shutdowns.
Hisense, based in Shandong, gained a stronger South China presence with the purchase of a stake in Kelon. Hisense has historically been a maker of TVs but began production of air-conditioners in recent years, then acquired refrigerator manufacturers Beijing Xuehua Refrigerator and Nanjing Bole Refrigerator.
An analysts quoted by China Daily maintains that Kelon products remain competitive, and that the primary threats the company faces are financial and legal.
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