The company transferred their production to Hong Kong TPV Technology

Philips Electronics is abandoning TV production and transferring this division to a joint venture (JV) with Hong Kong-based TPV Technology. In the new company, Philips will receive a 30% stake with the right to subsequently sell it to TPV. Philips is finding it increasingly difficult to compete with Asian vendors, and the company's losses from television production since 2007 have reached approximately 700 million euros.

In a statement published yesterday, Philips Electronics said that Hong Kong TPV Technology will receive 70% of the joint venture, Philips will retain 30%. Moreover, 6 years after the signing of the final agreement on the creation of the joint venture, which is scheduled for the third quarter of this year, Philips has the right to sell its remaining 30% stake in the joint venture. Philips will grant the JV the right to use its brand for the first 5 years, with the possibility of an automatic extension of this period if the JV achieves its goals.

The joint venture will be responsible for the development, production, distribution and sales of Philips TVs worldwide, excluding mainland China, India, the US, Canada, Mexico and certain South American countries. Until the final agreement is signed, Philips will introduce its TV business to TPV representatives, who will also conduct an appropriate legal and economic assessment of the Dutch company's division. After Philips published its first quarter report yesterday and announced the transfer of TV production to a joint venture, its shares fell 0.3% on NYSE Euronext.

Philips' refusal to produce its own televisions was long expected. It became increasingly difficult for the company to compete with Japanese and Korean companies, especially in pricing. Since 2007, the production of Philips TVs has become completely unprofitable (the total loss reaches approximately 700 million euros). In 2010 alone, losses amounted to 130 million euros; in the first quarter of this year, this Philips division brought a new loss of 87 million euros. Royal Philips Electronics President and CEO Frans van Houten expects the joint venture to return its TV division to profitability.

Philips’ corporate changes will most likely not affect consumers, says Anton Guskov, director of public relations for the RATEK association: “Everyone is already accustomed to the fact that TV manufacturers have contract factories located either in China or in Eastern Europe, and there is no particular attention paid to the assembly location "Philips is one of the leading TV manufacturers, and its position is stable, as customers trust this brand."

Evgeniy Khvostik, Inna Erokhina

Philips turned off the TV