Schneider Electric partners with Delixi Group to enter China Low Voltage market 
(14/10/2006)
Schneider Electric has signed an agreement with Delixi Group for the formation of a Joint Venture dedicated to the manufacturing, marketing and distribution of Low Voltage products.
Delixi Group is one of the local leaders in the Chinese electrical distribution field employing about 14,000 employees across China. Delixi is recognized as one of China's famous brands.
This new Joint-Venture will be named Delixi Electric and will be incorporated in Wenzhou (Zhejiang Province) as soon as the conditions precedent and regulatory approvals are satisfied. Schneider Electric will own a 50% interest in the company while Delixi Group will hold the other 50%.
The Joint Venture will focus on addressing the Chinese market needs, and, through an exclusive relation with Schneider Electric, will also expand its specific business model into other targeted countries.
The Joint Venture is expected to generate in 2007, on a pro-forma basis, revenues of around €220m on a full year basis with an EBIT margin of approximately 10%. It would employ around 4,000 persons.
Delixi Electric's business model will be particularly adapted to capture the double-digit market growth in China's new urban development areas and to seize export opportunities in other emerging countries.
Russell Stocker, Executive Vice President, Schneider Electric Asia Pacific Operating Division, commented: « This new partnership will inaugurate a new business model for Schneider Electric which will add up to its existing approach based on prescription, services and solutions offering through value adding partners. Indeed, Delixi Electric will market independently a specific and complete offer of Low Voltage products, through a specific large network of more than 1,000 retail outlets. It will offer a different value proposition from Schneider Electric with a distinct market approach ».
Schneider Electric expects that this partnership will meet its Return on Capital Employed criteria within 3 years from completion.
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