Electrolux to Boost Asia Procurement
Oct 14, 2004
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Appliance giant Electrolux plans to source components worth U.S. $400 million, or about 20 percent of its procurement in Asia, from local manufacturers this year, a company official said.

The amount would mark an eight-fold increase from last year.

"We had a great experience from cooperating with local suppliers, so we plan to buy more from them this year," Jay Cheng, general manager of Electrolux's international purchasing office (IPO) in Asia, told The Taipei Times.

Electrolux, a Sweden-based electronics giant, has incorporated 13 big-name household appliance brands under its wing, including White-Westinghouse, Frigidaire, Gibson, AEG, and CHEF. The brands are said to collectively account for 85 percent of the market in Europe and North America and create average annual revenue of $14 billion.

The company had previously placed a small number of orders to Taiwan via its Asia IPO headquarters in Hong Kong. Last year, Electrolux opened a Taiwan IPO office and directly sourced about $50 million of components and parts from local companies to supply more than 100 factories scattered around the world.

To enhance competitiveness, Mr. Cheng said in his last visit to Taiwan that Electrolux had decided to increase its Asia procurement ratio from 5 percent to 10 percent. Bearing the brunt of the rising steel costs, Electrolux announced last month that it cannot meet the financial forecast this year. Thus, the company will further expand purchases from low-cost countries, especially in Asia, to cuts costs, Mr. Cheng said.

The largest portion of Electrolux's orders in Asia, unsurprisingly, goes to China due to the lower labor costs there, Mr. Cheng said. He did not reveal the value of goods purchased in the country. Last year, Electrolux sourced $200 million worth of products from manufacturers in China.

However, Mr. Cheng said Taiwan remains important to the company, as local manufactures control advanced technology for making quality high-end parts, a niche that the Chinese competitors find hard to compete with. (The Taipei Times)

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