Whirlpool Corp, a United States home-appliance maker, has agreed to form a 900 million yuan (HK$1 billion) venture with mainland firm Hisense-Kelon Electrical Holdings in Qingdao, making a foray into the home turf of their larger domestic rival Haier Group.
The venture, in which Whirlpool and Hisense have equal stakes, investments and management control, targets an annual output capacity of 2 million washing machines and 1 million refrigerators. The companies did not say when production will start.
'Whirlpool could effectively cut production costs by taking advantage of its Chinese partner's existing production lines and low labour cost to make its products competitive,' said Fang Xin, a home-appliances analyst with Shanghai-based Guotai Junan Securities.
In return, Whirlpool's design and technology expertise could help Hisense streamline its products and improve overall quality, Ms Fang said.
Whirlpool outbid Haier in 2005 for US brand Maytag amid concerns in the United States that a mainland firm would gain a dominant position in its domestic market.
Market observers said that the slowing US economy and rising costs of raw materials such as steel and plastic were pushing Whirlpool to expand overseas to sustain growth.