China A/C Maker Dismisses Europe, U.S. Investments Nov 15, 2005

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Chinese air-conditioner producer Gree Electric announced it will not invest production in Europe or the U.S., and said doing so is an act that violates the law of the market and gains nothing but empty fame in China.

According to Zhu Jianghong, board chairman of Gree Electric, home appliance production is labor-intensive and labor costs in Europe and the U.S are several times higher than in China, leaving little room for making profits. To build appliance factories in the countries that are transferring their appliance production to developing countries is simply a violation of the market rules, he said.

Gree has a production base in Brazil, where it boasts a large sales network and more than 150 service stations, in addition to a bonded warehouse. Its most recent annual sales totaled U.S. $10 million, but its profit at the end of last year totaled only 20 million yuan (approx. $2.47 million).

Zhu said that his company would not expand production to developed economies. Its target areas would include India, Pakistan, Vietnam and Laos, where the wage level is low. Even in the third world countries, it requires careful planning, he said. (XIC)

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