China Electronics Expands to Henan Province With Four New Stores in Mideast PRC Rural Markets
FIRST OUTLETS OUTSIDE ANHUI PROVINCE WILL ADD TO GROWTH.
LU'AN CITY, Anhui Province, China -- China Electronics Holdings, Inc. (OTC Bulletin Board: CEHD), one of rural China's major U.S.-listed retailers of household appliances and consumer electronics, announced that it opened four new stores in its core rural markets and is operating outlets in neighboring Henan Province. "These direct stores in Gushi have expanded China Electronics for the first time outside of our home market of Anhui Province," said China Electronics Chairman and Founder Hailong Liu. "We are committed to meeting our objective to expand geographically and add 100 new direct stores as a U.S. public company," Chairman Liu added.
China Electronics through its PRC subsidiary Lu'an Guoying Electronic Sales Co., Ltd. (the "Company") operates a network of 600 franchise stores, 412 direct stores, and 3 company-owned locations in primarily rural areas of central China's Anhui and Henan Provinces under the brand of Guoying. In its most recent fiscal year ended December 31, 2009 China Electronics achieved after-tax net income of USD$9.7 million from USD$47.7 million in revenues. For the three months ended March 31, 2010 the Company earned USD$4.7 million in after-tax net income. The Company will be reporting results for the second quarter of 2010 with the filing of an amended 8-K shortly. As a condition of the recent financings totaling nearly USD$5.3m, China Electronics agreed to a net income target of USD$12 million, subject to certain adjustments, for the fiscal year ending December 31, 2010, and an uplisting to Nasdaq or the NYSE Amex exchanges. Hunter Wise Securities, LLC and American Capital Partners, LLC served as placement agents to the financings.
China Electronics' Guoying subsidiary is the exclusive wholesaler in the Lu'an area for products under the brand names Sony, LG, Samsung, Shanghai Shangling, Chigo, Huayang and Huangming. Guoying is the general sales agency of Sino-Japan Sanyo electronic products, such as Sanyo TVs, air conditioners, washing machines and microwave ovens. Guoying has teamed up with Huangming and Huayang, the two largest manufacturers of solar thermal products in China, to be their exclusive retail outlet in Anhui.
China Electronics also produces Guoying brand refrigerators under its own trademark, selling a total of 30,000 refrigerators in 2007, 46,000 in 2008, and 62,000 in 2009, and expects to sell 77,000 in 2010 and 100,000 in 2011, in PRC provinces Anhui, Henan and Hubei.
About China Electronics Holdings and Household Appliance Retailing in Rural China
China Electronics has been based in Lu'an City, Anhui Province, central China since its founding in 2001 and sells household appliances and consumer electronics of major manufacturers through a network of more than 1,000 retail stores in rural areas of the PRC's fourth- and fifth tier markets. For more information please visit www.chinaelectronicholdings.com.
Approximately 56% of China's population still resides in rural areas of the PRC, making rural residents the largest consumer group in the country. After many years of economic reforms, the average income of people living in China's rural areas has gradually increased. The rural market is largely untapped and has enormous potential for growth. This rural consumer group has tremendous purchasing power and is increasing as the Chinese government encourages rural communities to modernize.
The PRC central government has decided to expand internal demand by increasing the income of the rural population. Continuous improvements in the rural power network, rural transportation, and rural communication make the rural market extremely favorable for home appliances and electronics.
After many years of economic reforms, the average income of people living in China's rural areas has gradually increased. It is reported that the rural residents hold more than US $120 billion in savings and US$106 billion in cash. A survey done by the China Electronic Product Association showed that 14% to 33% of rural families are willing to spend their money on televisions, DVDs, washers and dryers, and telephones in the next few years. For example, refrigerator ownership in big and middle cities of China is over 95%, even 99% in some cities. However, the ownership of refrigerators is only 22.7% in rural areas of China.
The Chinese government has initiated a rural home appliance and electronics rebate program, called "Rural Consumer Electronics" plan, which provides that the maximum sales price of electronics is fixed at a price which is usually equal to or less than the market price in urban areas of the same product. Meanwhile, rural consumers can get a 13% government rebate on their purchases of electronics.
Finally, the current consumer electronics and appliances markets in big cities like Beijing, Shanghai, and Shenzhen are already saturated by an over abundance of competitors – leading to very lean margins. Although some competitors have announced interest in the rural market, none of the current competitors have established any significant presence in the rural markets. Successful brand names established in large cities are not an indicator of automatic success in China's rural market. Guoying is the first rural home appliance and electronics retailer in Anhui province.
LU'AN CITY, Anhui Province, China -- China Electronics Holdings, Inc. (OTC Bulletin Board: CEHD), one of rural China's major U.S.-listed retailers of household appliances and consumer electronics, announced that it opened four new stores in its core rural markets and is operating outlets in neighboring Henan Province. "These direct stores in Gushi have expanded China Electronics for the first time outside of our home market of Anhui Province," said China Electronics Chairman and Founder Hailong Liu. "We are committed to meeting our objective to expand geographically and add 100 new direct stores as a U.S. public company," Chairman Liu added.
China Electronics through its PRC subsidiary Lu'an Guoying Electronic Sales Co., Ltd. (the "Company") operates a network of 600 franchise stores, 412 direct stores, and 3 company-owned locations in primarily rural areas of central China's Anhui and Henan Provinces under the brand of Guoying. In its most recent fiscal year ended December 31, 2009 China Electronics achieved after-tax net income of USD$9.7 million from USD$47.7 million in revenues. For the three months ended March 31, 2010 the Company earned USD$4.7 million in after-tax net income. The Company will be reporting results for the second quarter of 2010 with the filing of an amended 8-K shortly. As a condition of the recent financings totaling nearly USD$5.3m, China Electronics agreed to a net income target of USD$12 million, subject to certain adjustments, for the fiscal year ending December 31, 2010, and an uplisting to Nasdaq or the NYSE Amex exchanges. Hunter Wise Securities, LLC and American Capital Partners, LLC served as placement agents to the financings.
China Electronics' Guoying subsidiary is the exclusive wholesaler in the Lu'an area for products under the brand names Sony, LG, Samsung, Shanghai Shangling, Chigo, Huayang and Huangming. Guoying is the general sales agency of Sino-Japan Sanyo electronic products, such as Sanyo TVs, air conditioners, washing machines and microwave ovens. Guoying has teamed up with Huangming and Huayang, the two largest manufacturers of solar thermal products in China, to be their exclusive retail outlet in Anhui.
China Electronics also produces Guoying brand refrigerators under its own trademark, selling a total of 30,000 refrigerators in 2007, 46,000 in 2008, and 62,000 in 2009, and expects to sell 77,000 in 2010 and 100,000 in 2011, in PRC provinces Anhui, Henan and Hubei.
About China Electronics Holdings and Household Appliance Retailing in Rural China
China Electronics has been based in Lu'an City, Anhui Province, central China since its founding in 2001 and sells household appliances and consumer electronics of major manufacturers through a network of more than 1,000 retail stores in rural areas of the PRC's fourth- and fifth tier markets. For more information please visit www.chinaelectronicholdings.com.
Approximately 56% of China's population still resides in rural areas of the PRC, making rural residents the largest consumer group in the country. After many years of economic reforms, the average income of people living in China's rural areas has gradually increased. The rural market is largely untapped and has enormous potential for growth. This rural consumer group has tremendous purchasing power and is increasing as the Chinese government encourages rural communities to modernize.
The PRC central government has decided to expand internal demand by increasing the income of the rural population. Continuous improvements in the rural power network, rural transportation, and rural communication make the rural market extremely favorable for home appliances and electronics.
After many years of economic reforms, the average income of people living in China's rural areas has gradually increased. It is reported that the rural residents hold more than US $120 billion in savings and US$106 billion in cash. A survey done by the China Electronic Product Association showed that 14% to 33% of rural families are willing to spend their money on televisions, DVDs, washers and dryers, and telephones in the next few years. For example, refrigerator ownership in big and middle cities of China is over 95%, even 99% in some cities. However, the ownership of refrigerators is only 22.7% in rural areas of China.
The Chinese government has initiated a rural home appliance and electronics rebate program, called "Rural Consumer Electronics" plan, which provides that the maximum sales price of electronics is fixed at a price which is usually equal to or less than the market price in urban areas of the same product. Meanwhile, rural consumers can get a 13% government rebate on their purchases of electronics.
Finally, the current consumer electronics and appliances markets in big cities like Beijing, Shanghai, and Shenzhen are already saturated by an over abundance of competitors – leading to very lean margins. Although some competitors have announced interest in the rural market, none of the current competitors have established any significant presence in the rural markets. Successful brand names established in large cities are not an indicator of automatic success in China's rural market. Guoying is the first rural home appliance and electronics retailer in Anhui province.
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