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Hisense Buys Toshiba TV Brand

Hisense the Chinese Company that is struggling to make a profit in Australia has moved to acquire the Toshiba TV brand in a move that could impact Powermove in Australia, the Company has not said why they don’t have faith in their own brand to grow marketshare.

The $114M deal will see Hisense gain the rights to the Toshiba TV brand ahead of a court room appearance in the USA, after Sharp whose brand name they licensed three years ago accused Hisense of putting the Sharp name on low quality TVs.

Sharp said the TVs bearing its name broke US rules on electromagnetic emissions and that Hisense had made false claims about picture quality.

At this stage it’s not known whether Hisense will give up the Sharp name and replace it with the Toshiba brand name.
Currently Toshiba TV’s are only sold via Harvey Norman, next year the Company plans to release an OLED TV model in Australia.

Last night in Japan Toshiba confirmed that they are set to sell its television business in its latest effort to raise emergency funds, parting ways with a division that once symbolised the dominance of Japanese technology and thrust the brand into millions of living rooms around the world.

In Australia Hisense has been forced to buy market share by discounting their TV’s which are seen as being “inferior” to top end models made by Sony, Samsung and LG.

In a signal of how far the value of Toshiba’s TV unit has fallen — and of how aggressively Toshiba is now shedding parts of the company — the conglomerate sold 95 per cent of its TV and visual products $114m) to Hisense.

In Australia Hisense has been accused of buying TV market share with heavy discounting, lifted revenues from $100M in 2014, to $150M in to 2015 to over $180M in 2016.

Despite the increase in revenues the Company only paid $1.4M in tax in 2015, with questions now being asked as to how the Company manages to pay less than 1% tax in Australia, they are also among the top three whitegoods brands in Australia.

Their latest financials lodged in December 2016, reveal that the Company only spent $2.7M on advertising and marketing despite being a major sponsor of the Australian Tennis Open, Hisense, Arena and a global sponsor of the Red Bull Formula One team and in 2018 they will be a sponsor of the Football World Cup.

Of the $2.7M marketing spend, $1.9M was spent on advertising and $1.26M on business promotions.

Currently Toshiba TV’s sold in Australia are manufactured by Skyworks. ChannelNews understands that the contract will move to Hisense factories when the contact with the Chinese OEM manufacturer runs out.

In the past, a big technology sale to China might have triggered outrage in Japan but one Tokyo-based analyst said on Tuesday that the move was “unlikely to raise many eyebrows”.

The sale comes as people close to Toshiba have described “ongoing problems” behind the scenes of the company’s efforts to secure its finances after huge losses emerged last year at its US nuclear subsidiary.

In September, Toshiba sold off their memory chip business, its most valuable unit, to a consortium led by private equity firm Bain Capital.

But the company admitted earlier this month that it was making contingency plans in case the deal was not completed by the end of Toshiba’s financial year in March 2018.

The biggest threat to the sale arises from an embittered legal dispute between Toshiba and Western Digital, Toshiba’s business partner in the joint venture that underlies the unit.

Western Digital filed a lawsuit in the US in an attempt to block the sale.

The case is expected to drag on for years, but lawyers expect that the next few months could produce a judgment on whether the sale could be suspended during that process.

A pause could cause significant trouble for Toshiba, which remains at risk of being delisted from the Tokyo Stock Exchange if the sale is not completed by the end of March and the company endured a second consecutive year in negative shareholder equity.

Alongside the sale of the chip unit, people close to the company said Toshiba has been studying how it might offload other parts of a conglomerate that sprawls across hundreds of subsidiaries and affiliates from hospital management to elevator manufacturing.

Those include the possibility of a sale of new shares — possibly worth as much as Y600bn. Reports of such a large dilution, which emerged last week, lopped about 10 per cent off Toshiba’s value over two days of trading.

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