UPDATE: CHINA NPC: Haier Working With GE On Rural China Appliance Sales

(Adds background on Haier international expansion, rural appliance sales.)

By Aaron Back

Of DOW JONES NEWSWIRES

BEIJING -(Dow Jones)- Haier Group President Yang Mianmian said Thursday the company started cooperating with General Electric Co. (GE) last year to sell and distribute GE household appliances in rural China.

Haier has been a main beneficiary of government policies to subsidize the purchases of appliances and electronics by China's rural residents. Last year, the company's sales to rural areas rose by more than 30%, and this year the company is targeting another 30% rise, Yang said.

"(GE) noticed that we have built an excellent rural sales network," she said in a meeting with reporters on the sidelines of the National People's Congress.

Haier held talks with GE in 2008 to buy the U.S. firm's appliance unit. Yang said Thursday that Haier didn't buy at the time because the price for the unit was too high.

She said the price now would likely be lower, but asked if Haier is still considering the purchase, she said "right now we are not at the acquisition stage." She didn't elaborate.

Before holding talks with GE, Haier made an unsuccessful bid for Maytag Corp. in 2004, but lost out to Whirlpool Corp. Yang declined to comment Thursday on whether the company would again make a bid for a major appliance brand abroad, saying it depends on market conditions and opportunities.

"The real significance of the rural appliances policy for Haier is that it forced us to change our development model," Yang said. To meet the new demand, Haier created products customized to meet rural users needs and developed an extensive network to sell, distribute and service its products across the country.

Haier accounted for 32% of all appliances sold under the program, Yang said.

Haier Group's total domestic sales will likely rise by around 20% this year, she said. Domestic sales were around 75% of total revenue in 2009.

In January, Zhang Tieyan, director of Global Branding Operations, said Haier's revenue rose around 10% in 2009, from CNY119 billion ($17.4 billion) in 2008.

Haier Group is the parent company of Hong Kong-listed Haier Electronics Group Co. (1169.HK) and Shanghai-listed Qingdao Haier Group Co. (60090.SH)

-By Aaron Back, Dow Jones Newswires; (8610) 8400-7701; aaron.back@dowjones.com

(END) Dow Jones Newswires

March 11, 2010 06:34 ET (11:34 GMT)

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