Next big name in TV and social responsibility

The Chinese appliance giant Hisense is still relatively unknown in South Africa, but that’s about to change, thanks to a visionary investment, writes ARTHUR GOLDSTUCK.

The town of Atlantis in the Western Cape may have been named after a mythical Utopia, but there is nothing idyllic about it. A legacy of the apartheid era, it was established specifically to house coloured people from Cape Town far enough to keep the city white, but close enough for the factories that would draw on its labour pool.

It was a dismal failure of social and economic engineering. Today, unemployment, poverty and gangsterism is the typical experience of the quarter-million residents of Atlantis. Signs of desperation are everywhere: in crumbling buildings, and in lines of people outside factories, hoping for jobs to be dished out like scraps off a table.

So when a new factory opens in Atlantis, it’s cause for celebration. This month, the Chinese appliance giant Hisense came to town, officially opening a 25,200 square meter factory. At first, it will only make a small dent in unemployment around 300 people have been employed from the local community. But the impact of those 300 jobs goes far beyond the large gates of the complex.

The people waiting in hope outside the gates every morning tend to disappear by lunchtime, but they still have reason to hope.

The hope lies inside the factory, at a shining new production line for high-end flat-panel TV screens.

‚”All the workers along the production line were employed practically off the street, and trained into skilled positions,‚” says Ebrahim Khan, deputy general manager of Hisense SA. He points to one of the workers, tapping on a touchscreen mounted on the production line.

‚”That man was a member of one of the Atlantis gangs before he decided to clean up his act and apply for a job here. Now he has these skills, ands he’s bringing his income home to his extended family. He’s become a hero in the community because he is a role model of how a job can turn your life around.‚”

No doubt, such stories abound at the factory. But do they result in better TV sets? That’s a key question for Hisense, which is still relatively unknown outside its home base in China. The company was founded in 1969 as a small radio factory, but has led the Chinese market in flat-panel TVs for nine years in a row.

Imported sets have given it about 25% of share in the South African LED market. In larger screens, from 50‚” to 65‚”, it has an astonishing 42% share.

Far from the image of a budget brand, says Khan, Hisense has been dominant in premium range models for the past year. It gains its edge from a three-year warranty compared to one year for most other brands and a repair-while-you-wait service in three major centres.

Hisense has invested R350-million in the factory, and part of that investment has gone into training. A significant amount of that training has gone into quality control, ensuring the factory meets the company’s international standards.

A fascinating aspect of the Hisense philosophy is that, where a human being can do the job as well as a machine, the company prefers to give someone a job. That focus on social responsibility extends beyond the production line.

A fully grassed soccer field with professional nets has been built in the grounds at a cost of more than a quarter-million rand. During breaks, it is in continual use. When female workers complained that this favoured the men, the company responded by allocating similar funds to a professional netball court. The concrete for the court was being laid this week.

The most compelling aspect of the Hisense brand, however, is its impact on the market. For now, it still plays second fiddle to the likes of Samsung and LG in the appliance market. But it has quietly taken 14% of the refrigerator market, and is the fastest growing non-South African brand in the country.

In the next five years, it intends growing its factory staff to 1000 employees. Last year, it sold 140 000 flat panel TVs and 170 000 refrigerators in South Africa. This year, it will start shipping tablets and smartphones. If the competitors have not yet noticed this ‚”upstart‚”, they soon will.