Foxconn shifts from contractor to branded televisions

CyberMart, the retail business unit of Taipei-based Hon Hai Precision Industry Co Ltd, the parent company of the electronics maker Foxconn Technology Group, began offering its branded television sets on the mainland on Thursday.

The 60-inch sets have been developed with the US-based electronics retail marketplace RadioShack Corp, according to CyberMart's website.

"CyberMart has its own marketing agenda. The rollout of the TV is closely related to CyberMart's collaboration with RadioShack," Foxconn spokesman Liu Kun said.

The RadioShack-labeled TV sets are priced at 8,999 yuan ($1,447), and are available through CyberMart's outlets and its authorized online store on Tmall.com, China's largest business-to-customer website.

To drum up consumer interest, CyberMart has been offering rebates of up to 1,000 yuan to select online customers that follow the company's micro blog.

Sales of the TVs in Taipei since late December have been brisk. The first 500 were sold in half a day, the Taipei Times reported.

CyberMart has been promoting the device by highlighting its advanced LCD panels, according to its website.

Hon Hai made an investment last year in Sharp Corp's LCD panel plants in Japan, giving Hon Hai access to 60-inch flat LCD panels from the world's only 10th-generation panel plant at a lower cost.

The move sped up Hon Hai's ambition to move up the value chain by integrating its manufacturing and sales resources, said Luo Qingqi, an appliances expert at Pale Consulting, a market research firm on electronics retail.

"Foxconn's product rollout marks the company's first step up the value chain, rather than hiding behind the scenes as an original equipment manufacturer as it had done before. Regarding its new TV, Foxconn can take advantage of its ability in mass-production and design," Luo said.

Zhang Bing, China research director of NPD DisplaySearch, a consultancy specializing in the display supply chain, said the price is higher than market expectations, given that similar TVs produced by Foxconn for North America sell for $999.

"Plus, RadioShack has yet to establish its name on the Chinese mainland. TVs are durable goods, so it takes time for people to discard old ones and accept new brands," he said.

But Luo added the TV offers great value, considering its world-class screen.

However, CyberMart is limited in its sales ability, he added, because the retail chain is not doing as well as expected.

"For example, the first CyberMart store in Shanghai's downtown Huaihai Road has shut down. And due to the overall slump in the retail sector, the company's goal of expanding to 50 stores nationwide by 2015 is unlikely to be met," he said.

Still, Foxconn is likely to be using the 60-inch TV to test the waters for future branded products, Luo said.

"I'm sure Foxconn is poised to roll out a collection of homegrown products. It's just a matter of time," he said.