JRDC, a subsidiary controlled by TCL Communication Technology Holdings Ltd (TCT), has received US$16 million from two overseas strategic investors.

JAFCO Asia, a 100 per cent subsidiary of Japanese private equity firm JAFCO, is one of the two strategic investors.

The cash is expected to boost research and development (R&D) at JRDC and TCT, a leading Chinese handset maker.

The injection of cash will increase total funding at JRDC to more than US$46 million, said Hong Kong-listed TCT, a unit of TCL Corp, the world's top TV maker.

JRDC is an R&D facility established by TCL and strategic investors to provide mobile phone solutions to handset makers and global operators.

It will focus on the development of cost-effective camera phones in 2006 as well as multimedia and 3G (third-generation) handsets in 2007-08.

TCT is a top mobile phone maker in China. But since last year it has seen losses, largely due to an industry downturn at home as well as its merger with Alcatel's mobile phone unit.

TCT has a stake of about 46 per cent the largest in JRDC.

After the introduction of the US$16 million investment, its stake will be reduced to 39 per cent but TCT will remain the single largest shareholder.

"JRDC was set up with the aim of sharing capital resources and R&D expertise with strategic partners," said Liu Fei, CEO of TCT.

"The introduction of new strategic investors has further strengthened its product development capability and thereby improved our overall competitiveness in the handset industry."

Liu said TCT's overseas business is making a turnaround, with a strengthening of relationships with global operators.

Unaudited financial results for the first quarter of this year showed TCT made a gross profit of HK$149 million (US$19.1 million) during the period. Its profit margin increased to 15 per cent compared to 5 per cent one year ago.

During the first quarter, TCT sold 2.75 million mobile phones overseas, up 79 per cent year-on-year. But sales at home dropped by 74 per cent to 290,000 units.

The increasing R&D capability of JRDC is expected to boost TCT's performance in the future.

"In the second half of this year, we will continue to attack overseas markets and improve profitability," said Liu.

"And we will try to regain our dominance of the high-end mobile phone market at home by introducing a product mix of various multimedia devices."

JRDC CEO Yuan Yi said the firm "will continue to focus on the development of innovative ideas and concepts along its R&D roadmap."

Source: China Daily