Sony Ericsson expands in-house manufacturing capacity in China

Sony Ericsson Mobile Communications has received Chinese Ministry of Commerce approval to take control of Beijing Suohong Electronics Co. Ltd. (BSE), a Sony China controlled manufacturing facility, by raising its share holding to 74.5%. The BSE site, which is 60% dedicated to the outsourced assembly of printed circuit boards for Sony Ericsson, will become an in-house manufacturing facility.  Sony Ericsson will increase its stake in BSE from 10% to 74.5% through the acquisition of Sony China’s shares; local minority shareholders will remain unchanged. 

Going forward BSE will work in strong cooperation with Sony Ericsson’s majority owned Beijing SE Putian Mobile Communications Co. Ltd. (BMC), located next door, to maximize economies of scale and develop a fully integrated manufacturing process from printed circuit boards to product customization.

In addition, Sony Ericsson today announced the establishment of a Software Testing Center and a Creative Design Center in China, and its commitment to increase sourcing from suppliers in China and Southeast Asia.

“These combined actions will create Sony Ericsson’s first multi-functional base that includes research, design, development, manufacturing and regional sales and marketing. The base will act as a powerhouse for the company’s future growth and development not only in the key economic region of China, but also globally," said Sony Ericsson President Miles Flint.  “The China telecoms market is one of the fastest-growing and dynamic in the world, and is a key market for Sony Ericsson.  Today’s announcement illustrates the company’s long-term commitment to China and the Chinese market, as well as the desire to increase global manufacturing capacity in order to support an expanded product line-up going forward."

Since August 2002, when the company first established operations in China, Sony Ericsson has focused on building its presence in this highly competitive and strategically important market. The BSE acquisition will further strengthen supply chain, expand the company’s in-house manufacturing capabilities for the global market and complement existing in-house manufacturing at Beijing SE PUTIAN Mobile Communications Co. Ltd (BMC).  The establishment of a Creative Design Center will result in more products optimized for the Chinese market.  And, the creation of a Software Test Centre, focusing on function and system testing, will build a global testing hub that serves all Sony Ericsson’s Development Units. The long-term aim is for the majority of Sony Ericsson’s testing to be conducted at this Centre in China.  In addition, the company is committed to increasing local sourcing from China and Southeast Asia to support these activities. 

In the past four years, Sony Ericsson has invested 60 million USD in China, and established a strong sales and marketing presence, in-house manufacturing, and Development Unit China, one of five global development units. The company does business with approximately 150 local suppliers from across China; in 2004 local sourcing reached more than US $1.2 billion in value to the local economy, with a localization rate for parts and components averaging 80%.

Sony Ericsson has established itself as a major force in the Chinese telecommunications industry by working closely with operators, distributors and retailers. In 2004, the BMC manufacturing facility became the largest export company in Beijing and supplied approximately 1/3 of global Sony Ericsson volumes.   www.sonyericsson.com

Outline of BSE Ownership Interests: