Chinese consumer electronics giant TCL Corp yesterday said it will set up a financial joint venture to provide services for its sprawling units.

By teaming up with the Hong Kong-based Bank of East Asia, TCL hopes the venture will help it improve its financial performance.

In a statement to the Shenzhen stock exchange, TCL said it will invest 310 million yuan (US$38.8 million) in the venture called TCL Finance Co and have a 62 per cent stake.

Bank of East Asia will spend 100 million yuan (US$12.5 million) for 20 per cent, said TCL Corp, based in Huizhou, a city in South China's Guangdong Province.

Two subsidiaries of TCL Corp will hold a combined 18 per cent stake for 90 million yuan (US$11.25 million).

The financial unit will take deposits and provide loans and clearing services for its units such as TCL Communication Technology Holdings Ltd and TCL Multimedia Technology Holdings Ltd. Approval must first be given by the China Banking Regulatory Commission, the company said.

The planned venture will also need shareholders' approval at a meeting in April, said the statement.

Wang Guoping, an analyst with China Galaxy Securities, said it is still rare for a private company in China to form its own financial venture, although many State-owned enterprises have launched financial ventures.

China's banking regulator relaxed rules in 2004 to make it easier for domestic companies to form financial units to help them better manage their resources.

"This may serve as a platform for TCL to better use its resources within the company, control its cash flow and reduce costs," Wang said.

TCL's business includes TV sets, refrigerators, PCs and mobile phones.

The firm has been aggressively expanding its research and development (R&D) capabilities.

Wang said the tie-up between TCL and Bank of East Asia will benefit both.

Source: China Daily