China’s largest television producer, Hisense Group, is in discussions to acquire a 26% equity stake in Epack Manufacturing Technologies, a subsidiary of Epack Durable, as part of its plan to deepen its manufacturing footprint in India.
Key Highlights
- Partnership with Epack Durable:
- Hisense has partnered with Epack, which is building a large production facility in Sri City, Andhra Pradesh, to manufacture air conditioners, refrigerators, washing machines, and small appliances under the Hisense brand.
- The partnership is expected to generate $1 billion in additional revenue over the next five years.
- Facility Investment:
- Epack’s new manufacturing plant will require an investment of ₹800–₹1,000 crore, phased over time.
- A component vendor park spanning 80–100 acres is also planned to support the facility’s operations.
- Strategic Goals for Hisense:
- Acquire a 26% stake in Epack’s manufacturing subsidiary to bring proprietary technologies, designs, molds, and production capacities from China to India.
- Expand operations in India by securing Foreign Direct Investment (FDI) clearance under Press Note 3 rules, requiring multiple government department approvals for investments from neighboring countries like China.
- Epack Durable’s Current Operations:
- India’s second-largest contract manufacturer of air conditioners, catering to major brands like Daikin, Voltas, Panasonic, Haier, and Blue Star.
- Generated ₹1,419 crore in revenue in FY24.
- Upgrading an existing plant with a ₹250 crore investment, set to begin AC production for Hisense by June–July 2025.
- Retail Expansion by Hisense:
- Currently sells televisions in India via e-commerce platforms, with production by contract manufacturers such as Dixon Technologies and Bhagwati Products (Micromax).
- Plans to expand offline retail and strengthen its local manufacturing base.
Industry Implications
- Strengthened India-China Partnerships:
Hisense follows other Chinese companies, such as MG Motor, Vivo, and Haier, in forming equity alliances with Indian firms to navigate regulatory hurdles and expand in India. - Boost to ‘Make in India’ Initiative:
Epack’s manufacturing facility and Hisense’s technological contributions align with India’s push for local manufacturing, reducing reliance on imports. - Competitive Landscape:
Hisense’s expansion adds competition to the Indian appliance and electronics market, challenging existing players while leveraging its global expertise.
Challenges
- Regulatory Hurdles:
- Investments from China require approval under stringent Press Note 3 rules due to geopolitical tensions.
- Potential delays in securing clearances could impact project timelines.
- Market Competition:
- Competing against established players like Amber Enterprises and leading global brands in India could pose significant challenges.
Conclusion
Hisense’s strategic stake in Epack Manufacturing Technologies represents a significant step toward its long-term commitment to the Indian market. With a focus on localization, technological transfer, and retail expansion, the partnership has the potential to reshape India’s manufacturing ecosystem and strengthen Hisense’s position in the region.