Industry questions Hisense Electric's acquisition of Sharp Mexico. (Photo : Reuters)
Hisense, one of the largest TV manufacturers with headquarters based in eastern China's Shandong Province, has just bought Sharp's Mexico division.
The acquisition will allow Hisense to legally use the Sharp brand in the Americas, except in Brazil. According to sources, a plant in Mexico that manufactures around three million LCD TVs a year will be included in the deal that is said to be valued at $23.7 million.
In spite of the fact that Hisense's initiatives in globalization have taken a step forward, the industry's stakeholders still have doubts on whether the company has the capacity for cross-border operations as well as its efficiency in general.
This can be related to a previous situation when Hisense acquired Guangdong-based Kelon Electrical Holdings, which turned out to be unsuccessful. On Sept. 9, 2005, Hisense bought a 26.43-percent share in Kelon to achieve the biggest ownership of the company. Being a state-owned enterprise, Hisense fell short in its process integration capacity since Kelon was more commercialized.
It was initially a favored partnership until it turned out badly due to recurring disagreements between different corporate cultures of the northern and southern China.
Given that Hisense failed to manage a local acquisition, it is only normal for the industry to raise questions about the company's ability to take over a cross-border corporation.
This purchase seems to be more of an internal confidence booster to establish optimism among Hisense's investors, the report said.
However, the China Business Journal said that the initiative showed otherwise. Taking in the Sharp brand as its high-end brand and letting the Hisense brand sit in the background implied that the company lacks self-confidence.
Hisense has stated a number of times that the deal was intended to widen the company's output and distribution territories, but this only emphasizes the weakness of Chinese brands in the market.
