Friday, March 05, 2010

Changhong: An Interesting Chinese Corporation

Thanks to one corporation, families in the US can enjoy a DVD movie without breaking their banks, sort of.

Before Changhong DVD players being dumped into the US retail markets at $20 a piece, a DVD player was sold at more than $150 in the least. But what is interesting is that Changhong dumped $1 Billion worth of DVD players to the US in a duration of over three years. A Taiwan born Chinese American businessman imported Changhong DVD players from China at about $100 a piece, then sold them to retailers at $10 a piece, for three years. Changhong did not receive a penny from it. When Changhong reported realized what had been happening, it was too late to do anything about it. Reportedly, the $1 Billion lost wiped out everything Changhong had accumulated in the past 10 years, and more.

Magically, Changhong survived, and continued its thrive in Chinese household appliance market. How could a company survive from a lost of this scale, only God knows.

A recent whistle blower case revealed even more shocking scenario of the company. A former Changhong executive Fan Dejun told the court that Changhong blew up its sale by $1 Billion in the year 1998 alone. For example, Changhong claimed it pocketed $100 Million from Chongqing Departmental Store (a major retailer and distributor in Chongqing metropolitan), however, the real figure was only $15 Million. Two other stores in Sichuan Province claimed sales of Changhong product of $120 Million and $80 Million, while other official numbers showed no store in Sichuan sold more than $50 Million in the year of 1998.

Also in 1998, Changhong surprised the country in a stun announce that it had reserved 250 million color TV tube from eight largest color tube manufacture in China, which equals to two years of total production volume in China. At the time, Chinese law prohibited manufacture to import TV tubes from overseas. Therefore, Changhong's strike basically pushed every other TV manufacture in China down the ridge. Such bland monopoly measure was endorsed by the central government and legal systems.

Who are these guys?

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