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Electrolux strategy to go upmarket

SWEDISH appliance maker Electrolux AB plans to close its factory in Changsha to shift its China business to the high-end household appliance market in accord with its global strategy, the company told Shanghai Daily yesterday.

The Europe's largest maker of kitchen appliances said it will retreat from the mid to low-class refrigerator market and shut down its factory in Changsha, Hunan Province, next month. But it will invest heavily in R&D and the production of high-end products in Hangzhou Bay.

The closure of the factory involves about 700 employees. Electrolux said it has made arrangements for the staff with local government but did not release details.

Gunilla Nordstrom, head of Electrolux major appliances Asia Pacific and executive vice president of Electrolux, said the company will still "make significant investments" in China in a bid to snap up a bigger share of the high-end home appliance market.

The white goods giant closed its refrigerator factory in Nanjing in 2004 and now the plant in Hangzhou is its only production base in China.

With competition getting fiercer in the mid to low-class market, Electrolux said it intended to concentrate on high-end products and focus on the country's eight key provinces and four municipalities.

It will launch a special range of colored home appliances soon to cater for high-income consumers.

Group chief executive Hans Straberg said earlier, "When demand picks up, the key is to have the right structure, the right products and a competitive cost level. This we have."

Full year profits for the company plunged more than 80 percent last year to 366 million kronor (US$44.55 million), down from 2.9 billion kronor in 2007 because of weaker demand, higher costs for raw materials and the temporary shutdown of production plants to prevent inventories from building up.


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