Popular domestic home appliances brand Jaipan Industries is planning to set up a manufacturing unit in China.

The company is also eyeing the service industry to tackle the entry of multinationals and the onslaught of cheap Chinese goods in the Indian market.

Besides, the company is in talks with foreign companies such as Braun, Panasonic and Black & Decker to provide the after-sales services to their products in India.

The entry of foreign organised and unorganised players has adversely affected Jaipan, thus shrinking its market share in the small appliances sector from 12 per cent to 6 per cent.

With the entry of multinationals in the kitchen appliances sector, established domestic players are scouting for alternative options to sustain in the sluggish market.

J N Agarwal, managing director, Jaipan Industries, said, "The small appliances market, pegged at Rs 2,000 crore (Rs 20 billion), is growing; but the entry of multinationals and the Chinese goods are taking away the chunk of market share.

"Expensive labour, rising raw material costs and dipping margins have made local manufacturing a difficult task. Hence, the company is pondering on setting up a manufacturing unit in China to take advantage of the tax subsidies enjoyed by the multinationals."

According to industry sources, selling locally manufactured products is more expensive than selling imported goods in the Indian market. Jaipan Industries, which manufactures about 100 products at its production facilities in Mumbai, Silvassa and Himachal Pradesh, is also looking at reducing the dependence on manufacturing and entering the service sector.

The decrease in demand has compelled Jaipan to utilise only 33 per cent of the current manufacturing capacities.

"The consumers' buying pattern is changing and they no longer prefer durable goods. This change has also prompted the company to focus on the servicing sector and is in talks with Braun, Panasonic and Black & Decker, manufacturer of power tools and accessories, to provide the after-sales services to their products in India," said Agarwal.

While tackling the entry of new players in the market, Jaipan Industries is also aggressive on increasing its retail shelf space.

Though Jaipan retails its products through a chain of about 5,000 dealers, the company is also making its presence felt in the new retail formats.