Glen Dimplex to increase China links

Glen Dimplex will almost double the value of components that it sources from China to $300 million (€226.7 million)by 2007 to cut the cost of manufacturing products.

It also signalled yesterday that it plans to move more jobs to China to take advantage of the massive expansion of the world's fastest-growing economy.

Mr Seán O'Driscoll, Glen Dimplex chief executive, said the firm now viewed Eastern Europe as only a staging post on the way to moving more low-cost jobs to China in the future. He said Glen Dimplex would hire an additional 40 people in China this year to grow its components sourcing unit, which already employs 90 staff.

He said five years ago Glen Dimplex set this division up with three people and sourced $20 million worth of components for raw material for its factories. He said the firm now sources $180 million worth of components for its 22 global manufacturing facilities but planned to expand this to $300 million within two years.

In a stark warning to other Irish firms, Mr O'Driscoll said that China is currently changing the rules of business and was creating relentless price deflation and competition for some goods.

"Consumers don't care where a product is manufactured, and as long as it is good quality and at the right price point... so firms need to view China as an opportunity but also a massive threat."

In a speech to an Enterprise Ireland conference, Competitiveness Through China, which focused on the topic of Irish firms doing business in China, Mr O'Driscoll, said firms should make partnerships with Chinese firms to tackle its fast-growing market.

He said Glen Dimplex's joint venture in China to manufacture and sell storage heaters in the domestic market enabled the company to avoid import duties on products of 35 per cent. But he also warned firms about different attitudes to health and safety in China, and the danger of piracy.

Enterprise Ireland director Mr Alan Hobbs told the conference that Irish trade with China had increased more than 40 per cent in the first nine months of 2004.

He said more Irish firms should consider outsourcing some of their manufacturing to China.