Future on Ice for Famous Fridge-Maker
After decades in the sun, a Chinese brand synonymous with refrigerators is getting frozen out by nimbler competition, reflecting difficulties many of the oldest and best-known names face in China’s young market economy.
Home-appliance maker Henan Xinfei Electric Co. Ltd. was China’s pride and joy when it introduced cutting-edge refrigerator-production technology from European giant Philips to China in the 1980s. But following a lengthy decline that ended in a massive overhaul last year, the money-losing company is now turning to an online auction as it searches for new relevance.
Xinfei, whose name is a hybrid based on its domestic parent and Philips’ Chinese name, is one of dozens of older Chinese brands that flourished in the early years of the country’s reform and opening-up, when China began to move from a planned to market economy. But many of those firms, which have strong state-owned backgrounds from China’s socialist past, are now struggling to compete with an even younger, faster-moving generation of private firms as well as imports.
An auction of Xinfei, along with sister companies Henan Xinfei Household Appliance Co. Ltd. and Henan Xinfei Refrigeration Appliances Co. Ltd., will be held on June 28 on the online auctioning site of e-commerce giant Alibaba, according to a webpage (link in Chinese) where the sale will take place.
A modest starting price of 450 million yuan ($70.3 million) is all that’s required to bid for most of Xinfei’s assets, while a second auction in July will see the company sell some of its properties with an opening bid of 115 million yuan.
The sale could mark either a new beginning or perhaps a quiet end for a company that evokes strong memories for many older Chinese for its cutting-edge products back in the 1990s.
One of those Chinese, a 60-year-old surnamed He, told Caixin he had a Xinfei fridge that was solid and durable, and recalled the brand’s famous jingle during its heyday that said: “No matter how impressive Xinfei’s advertisements, they can never compare with Xinfei refrigerators.”
“But after Singaporeans became its major shareholder, the company failed to adapt to the local market,” He said, recalling the company’s more recent past of changing ownership as it slowly fell from grace.
Based in the city of Xinxiang in Central China’s Henan province, Xinfei was established in 1984, just six years after then-leader Deng Xiaoping launched the country’s Reform Era in a bid to invigorate the economy. It imported technology from Philips two years later, selling under the Xinfei name that would later become a household name for many. It later renamed the brand Frestech.
Xinfei’s banner years came in the 1990s when rising Chinese incomes were making such home appliances affordable to many. The company was China’s top fridge-maker with nearly a fifth of the market in 1996. It ranked third as recently as 2005 with annual sales of 3 million units, according to government-backed media Beijing Business Today.
But things started heading south after Singapore-based property and hospitality giant Hong Leong Asia Ltd., a former minority partner, increased its stake in Xinfei to 90% in 2005. Hong Leong appointed a group of Singaporean executives to head the company, even though they had minimal understanding of appliance manufacturing and the China market.
At the same time, a newer generation of domestic rivals like Haier, Gree and Hisense began building up their technological and marketing muscle, and foreign brands from Japan and Europe also move in on Xinfei’s domain.
The company ceased operations and conducted a major overhaul in November. Hong Leong revealed the company had been losing money since 2011, including massive net losses of $128.5 million and $120.7 million in 2016 and 2017 respectively.
Xinfei thought it had secured an investor earlier this year, but the rescuer changed its mind in late March. As a result, the company had no choice but to put itself up for sale at the online auction, a person involved in the reorganization told Caixin.
Contact reporter Coco Feng (firstname.lastname@example.org)
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