TTI looks beyond China

Hong Kong-based Techtronics Industries Co. Ltd. (TTI)<669> said it might be moving its manufacturing out of China due to increasing costs, The Daily Telegraph reported.

The owner of iconic brand Hoover said to The Daily Telegraph yesterday that growing inflationary and cost pressures in the Mainland were causing it the look elsewhere for low-costs markets that are closer to its major customers as well.

Rising raw material costs, wage inflation in southern China and increased tax burden has caused costs to increase in China. It was only sensible then to look for manufacturing capacities closer to its customers, TTI said. Options include Mexico and Eastern Europe, the report said.

Explaining its reasons, the company said the increased costs in manufacturing in China meant that the price rises would be passed on the retail partners and consumers.

While TTI's review came amidst the recent spate of recalls on Chinese products, the company said their decision was not due to the bad reports. "Slips like this cannot happen to us," a spokesman said to The Daily Telegraph. "We are different because we are making high-end products and we own the manufacturing and the quality-control procedures."

The spokesman also added the higher raw material costs were not only a Chinese phenomenon, but TTI was seeing this happen in India as well.

"We are not withdrawing manufacturing from China, but our review is likely to see us slowing our expansion there," said Horst Pudwill, chairman and CEO of TTI.

Techtronic Industries Co. Ltd. (TTI) manufactures and trades electrical and electronic products. The company bought over Hoover last December for over US$100 million. TTI said the integration of Hoover was proceeding according to plan as it unveiled record half-year earnings before interest, tax, depreciation and amortisation of HK$1.093 billion on turnover of almost HK$12 billion, The Daily Telegraph reported.