The Japan Times WORLD EYE REPORTS HONG KONG
©THE JAPAN TIMES	Wednesday, June 26, 2002

The power of a top-end name

Hong Kong group's acquisition of the legendary Nakamichi brand marks its move into own brand manufacturing. A natural evolution is taking place within traditional manufacturing and production companies in Hong Kong. A growing number of these have honed their manufacturing and marketing expertise and found that the time is right to move into selling under their own brands as well as for other retailers. Its is a growing trend for companies based in the SAR and it is happening across the board in all consumer goods markets, including toy manufacturing, apparel, food and beverage products and electronics.

Adrian Ma, Grande Group managing director and group executive officer (left) with Mike Binney, executive director and chief financial officer

Grande Holdings is a perfect example of this. In the past, the Grande Group concentrated on its OEM (original equipment manifacturing) and ODM (original design manufacturing) business. Aside from producing high tech units such as DVD players, CD Rom drives, and speaker drives for its subsidiary company Tomei Technologies, fully 90 percent of its customer base has been made up of the Japanese consumer electronic giants, reflecting the company's commitment to high quality products. Grande also owns Lafe Technology, which provides Digital Linear Tape (DLT), Ferrite Heads and Data Control Modules (DCM) for its customers.

Grande has acquired Japan's legendary Nakamichi brand to be its flagship own brand as it enters a new field of competition. Mike Binney, executive director and CFO of the Grande Group states: "Grande Group has diversified its interests from being only an OEM /ODM company, and is now now moving into the branded side. This naturally means more competition and pressure on margins but the group has taken a long-term outlook. In the last five years, we have realized that an interest in or the acquisition of well-known brands is the way to go. By doing this we can control every step of the process from product development, to manufacturing, to sales and distribution."

Nakamichi is a high-end name at the top of the audio market, representing a proud tradition of quality and innovation in acoustics and electronics. Grande's strategy has been to maintain this image and. along with its Japanese partners, diversify into providing complete lifestyle systems.

Nakamichi's top-of-the-line SoundSpace 12 Home Theather System

Part of this lifestyle image lies in its unique marketing concept. "Nakamichi products are only sold in showrooms," explains Binney, "rather than retail electronic shops where you will find a multitude of different brands. Our strategy has been to develop the retail showroom concept, which we have focused on placing in upmarket fashion locations and in high-end retail areas." Nakamichi is a niche player and Grande will ensure it remains a strong brand in its market segment. The group has invested heavily in the R&D and marketing of the Nakamichi product line. Four Nakamichi showrooms have opened in Hong Kong, with a fifth one to follow later this year.

Adrian Ma, managing director of Grande, says the future of Nakamichi will be an expansion of its traditional strengths: "Although Nakamichi's focus has been on audio, we are putting more emphasis now on home theater systems, promoting the Nakamichi Plasma Display System. Although today's trend is audio and video systems, I foresee a day when everything will be merged together. You will have a display unit in your house which can play DVD, TV, and can be used like a PC for the Internet as well."

Grande also has acquired the Sansui brand and is a major shareholder in Akai as well. "The main advantage of having your own brand is that you can take control of the brand and set the strategy," Binney continues. "You can plan for the long term rather than being responsible merely for manufacturing and design."

As the branded side of Grande's operations continues to grow, the company will maintain its ODM and OEM business in a two-pronged approach to business. Th It will continue to provide premium service for the larger consumer electronics brands under its Electronics Manufacturing Services (EMS) business.

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