Haier plans stake in toy maker Lung Cheong

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: January 18, 2013 10:20 am ET
Updated: January 18, 2013 10:33 am ET

Related to this story

Topics China, Consumer Products, Injection Molding

QINGDAO, CHINA -- A subsidiary of giant Chinese appliance maker Haier Group plans to take a 25 percent ownership stake in plastic toy maker and injection molder Lung Cheong International Holdings Ltd.

The deal is part of Lung Cheong's strategy to diversify its markets and strengthen its position in a challenging global toy industry.

Hong Kong-based Lung Cheong said the HK$278 million (US$35.9 million) investment by Haier would give the company additional resources and let it tap into Haier's experience building a global brand in the appliance industry, as the toy maker tries to expand business for its own branded toys.

The investment is coming from Haier Electrical Appliances Second (BVI) Holdings Ltd., a wholly owned subsidiary of Haier Investment, one of the investment companies within Qingdao, Shandong-based Haier, Lung Cheong told the Hong Kong Stock Market in a recent filing.

"The directors are of the opinion that by inviting Haier Electrical Appliances Second as strategic investor, the group can draw on the successful experience of Haier Group of companies in particular, in building up a well-known worldwide brand name and efficient manufacturing management and worldwide distribution channel," Lung Cheong said.

The toy maker declined further comment while the investment is pending completion, but said it believes Haier can help it "improve its business strategy towards the competitive toy manufacturing industry in recent years due to the uncertainties and soft demand from North American and European markets."

Haier has built itself into a global brand whose products are sold in over 100 countries, Lung Cheong said.

The firm also said the Haier investment was part of a plan to explore other markets outside the toy business, although in its stock filing it did not provide details.

"The directors are concerned that the global toy industry will continue to face challenges in the future… [and] have been actively exploring all possibilities of selective mergers, acquisitions and divestments to reduce the group's reliance on its toy business so as to seek alternate sources of revenue from new ventures," it said.

The Haier unit is buying 1.39 billion shares of Lung Cheong, which would officially give it a 25.47 percent ownership stake. Haier's purchase is part of a placement of 2 billion new shares the company is issuing from which it hopes to raise almost HK$400 million (US$51.5 million).

The Haier investment would be the latest of a series of significant moves for Lung Cheong. The company sold itsChinafactories in 2011 to Brisk Mark Holdings, a company owned by the son and brother of Lung Cheong's executive director Leung Lun.

Brisk Mark is 70 percent owned by Leung Kenneth Yuk Wai, Leung Lun's son, and 30 percent by Leung Chung Ming, Leung Lun's brother and a former executive director of Lung Cheong until April 2011, when he resigned as part of the sale to Brisk Mark.

Lung Cheong then set up a new 2,800 employee factory inIndonesia, where it said labor costs were lower than inChina.

In the six months ending in September, the company said its sales dropped 54 percent, to HK$146 million (US$18.8 million), owing to a difficult business environment and some of the company's global toy brand customers declining to move their production to the Indonesia factory.


Comments

Haier plans stake in toy maker Lung Cheong

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: January 18, 2013 10:20 am ET
Updated: January 18, 2013 10:33 am ET

Post Your Comments


Back to story


More stories

Image

Americhem beats weather woes at start of 2014 for good fiscal year

November 26, 2014 9:45 am ET

Gains from the automotive and construction markets provided a strong fiscal 2014 for Americhem Inc.    More

Image

Plastics News by the year: 1992

November 26, 2014 6:00 am ET

As Plastics News marks its 25th year of publication, we take a year-by-year look back at some of the events, people and curious coincidences that...    More

Image

PE prices drop for first time in two years, PP down 5 cents

November 26, 2014 10:22 am ET

North American polyethylene buyers might want to circle November 2014 in red on their calendars — since PE prices this month have fallen for...    More

Image

SPI hopes to build on EPS recycling

November 26, 2014 6:00 am ET

Successfully recycling expanded polystyrene can be a challenge, there's no doubt about that. EPS, however, has value, is in demand and deserves to be ...    More

Image

Pan-European plastics recycling show scheduled for 2015

November 26, 2014 6:00 am ET

Europe is to get its first pan-European exhibition and conference aimed at the region's plastics recycling industry next year.    More

Market Reports

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 million dollar plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events