By James Wells
SYDNEY, NSW: Philips may re-appear in the Australian retail market with consumer televisions following a decision overnight to create a joint venture between its loss-making TV business and an existing Hong Kong based original design manufacturer (ODM).
Philips has created a long-term strategic joint venture with TPV Technology, an existing business partner that manufactures televisions under an ODM agreement. Effectively, this sees Philips own the intellectual property behind the designs of the televisions, through its research and development labs in India and Belgium.
Current.com.au has been unable to confirm whether this will see Philips televisions re-enter the local market, after the decision was made on 31 December 2008 to cease distribution.
“We do not have as much information as you think we might have, a lot of the information is contained in the statement,” said one employee from Philips Consumer Electronics Australia contacted by Current.com.au.
The joint venture will see Philips own 30 per cent of the company and TPV the remaining 70 per cent.
Other aspects of the deal include the ability for Philips to sell its 30 per cent stake to TPV after six years as well as a minimum €50 million royalty paid to Philips annually from 2013 onwards.
Philips will grant the joint venture the right to use the Philips brand for an initial term of five years with an automatic renewal for another five years, subject to the joint venture meeting certain key performance indicators.
The joint venture will be responsible for the design, manufacturing, distribution, marketing and sales of Philips’ Television business worldwide, with the exception of mainland China, India, United States, Canada, Mexico and certain countries in South America.
Sales of Philips’ TV business amounted to more than €3 billion in 2010, however, it generated a €87 million net loss for the last quarter, impacting the €138 million overall net profit.
The deal has been announced by the new chief executive officer of Philips, Frans van Houten, who has wasted no time in implementing change since commencing in the role on the first of this month.
“The partnership will help create the scale and focus needed for our television business to return to profitability and to be successful in the very dynamic television industry,’’ said van Houten in the statement,
“We are committed to the continuity of Philips Televisions in the market through this venture. The partnership will leverage the strength of the Philips brand; innovation power and trade relationships; with the additional scale and manufacturing strengths of TPV. This decisive step is the right one for the television business, Consumer Lifestyle and Philips as a whole,” he said.
TPV chairman and chief executive officer, Jason Hsuan said he was very excited to have Philips as a partner in this new joint venture.
“We have had a solid working relationship with Philips for many years and we are confident that together we can become a leading player in television globally. Today’s announcement marks an important step in realising our growth ambitions in the television business and I am delighted to work with Philips as a partner on this,” Hsuan said.