SINGAPORE - A China-based subsidiary of Hong Leong Asia that deals in household appliances will stop its manufacturing and production activities as part of a restructuring exercise, the Singapore-listed parent said in a Singapore Exchange announcement on Monday (Oct 30).
This move comes after a strategic review of Henan Xinfei Electric, which makes and distributes refrigerators, freezers and air-conditioners.
The unit has been hit by a "challenging market environment" for its particular segment of consumer products, according to the announcement, which pointed to "intense competition and price pressure" in China.
Hong Leong Asia has also given the green light for the Xinfei unit to explore potential business tie-ups that could use Xinfei's trademark and intellectual property - for example, brand licensing or original equipment manufacturing partnerships.
It added that, as the details of the restructuring exercise are still being worked out, it would be premature for the company to estimate the financial impact at this point.
Ernst & Young (China) Advisory has been engaged to act as Xinfei's adviser for the restructuring.