China's largest home appliance manufacturer Haier is re-entering India after a failed attempt three years back.
The $5.5-billion company has proposed to set up a wholly owned subsidiary in the country. It has sought approval from the foreign investment promotion board for bringing in Rs 200 crore (Rs 2 billion) worth foreign investment into the country.
The investment, to be spread over a five-year period, will be made by Haier Electrical Appliances Corporation Ltd, the parent company, government sources said.
In its application, the company has proposed to engage in the manufacture, sale, supply and after-sales services activities and cash and carry wholesale trading of electrical and electronic products and appliances.
An industry source said Haier will manufacture and market white goods such as air-conditioners, refrigerators, washing machines, vacuum cleaners, microwave ovens, cooking ranges and other kitchen appliances in the country. But the company may initially engage in cash-and-carry wholesale trading.
The source also said that Haier has appointed T K Banerjee, director marketing of JK Industries, and a former executive of Godrej, as the chief executive of the Indian operations.
In 1999, Haier had entered into a 30:70 joint venture with Delhi-based picture tube maker Hotline. But it parted ways even before the operations could take off. Haier wanted to focus on imports which was not a favourable proposition to its Indian partner.
The return of the Chinese major is significant since the company is making a second entry close on the heels of another Chinese consumer electronics major TCL Electronics submitting its proposal for a second essay in the country.
TCL's first attempt was also aborted due to a failed marriage with its Indian partner, the Mulchandanis of Baron.
Industry sources point out that the Chinese CTV maker Konka is also doing the groundwork for a second entry into the country.
Equally significant is the fact that Haier is planning to make a comeback in the light of tight vigilance the Indian government is adopting against investments from China after incidents of a Chinese company getting involved in alleged espionage came to light.
TCL's proposal is on hold as the government has sought a no-objection from the company's previous Indian partner, the Mulchandanis, when it came to light that the two parties were fighting a legal case.
But Haier will find the going easier, since it has no case pending against its Indian partner.
The cooling-off period of six months before which a company needs to seek the consent of the previous or existing partner to set up a new venture is also completed.
In Hotline Haier Appliances Ltd, Hotline was the majority partner having 70 per cent equity.
The Chinese company owned the balance 30 per cent, aggregating to $10 million investment in the JV's paid-up capital.
