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Profits at China's leading electronics and information-technology companies dropped last year, due to intense market competition which led to thinner margins.
The top-100 IT and electronics companies on the Chinese mainland posted a total profit of 23.8 billion yuan (US$2.87 billion) in 2002, a decline of 5.6 percent from 25.2 billion yuan a year earlier, said the Chinese Ministry of Information Industry in a report.
A total of 45 out of the top-100 firms earned profits more than 100 million yuan, according to the report.
But profitability at domes-tic electronics products manufacturers still lagged behind those of their overseas rivals.
Qingdao-based Haier Group, which was listed as the No 1 home-grown electronics company in revenues last year, posted net profit of 2.73 billion yuan, compared with US$963 million for Sony Corp in its fiscal year of 2002, which ended on March 31.
The SVA (Group) Co Ltd slid one rung as the fifth-largest electronics company in the list, with revenues of 26.87 billion yuan last year. It was surpassed by Guangdong-based TCL Holdings Ltd which had revenues of 31.89 billion yuan.
"Chinese electronics firms began to face increased competition brought by the nation's entry into the World Trade Organization and responded by boosting research-and-design costs," said Hou Songren, president of Konka Group Co Ltd, the 15th-biggest electronics and IT products maker by revenues in China.
China's electrical appliance makers have been pouring millions of yuan to tap into niche markets including mobile phones, high-end televisions and audio-video equipment, as an attempt to offset the small profit margins in the middle- and low-end sectors.
The current profit margin of cathode-ray-tube color televisions is less than 2 percent in China due to years of price-cutting since the late 1990s. But the margin on the production of high-end sets, such as projection TV and plasma display panels, are more than 20 percent, said industry officials.
Despite the competitive environment, overall revenues for the 100 companies hit 571.9 billion yuan, an increase of 15 percent from a year earlier.
(Shanghai Daily May 6, 2003)
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