Shares in the Chinese Hisense Group's home appliance unit rallied after the firm said that it planned to invest about JPY21.4bn (US$200.3m) to become the controlling shareholder of Japanese supplier Sanden Holdings, taking it into the automotive air conditioning business.

The Hisense Home Appliances Group stock price rose by the daily limit of 10% to CNY16.70 (USD2.60) and Sanden Holdings' equity price tumbled 17.3% to JPY383 ($3.40), yicaiglobal.com reported.

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The report said the electric appliance maker – whose products are sold worldwide – plans to subscribe to 83.6m Sanden shares, gaining 75% of the voting rights, via private placement at CPY256 each due to its optimism about the electric vehicle market, the Foshan-based company said in a statement cited by yicaiglobal.com. The price was a bit more than half of Sanden's closing price of JPY463 on 1 March.

According to the report, Tokyo based Sanden had been struggling amidst the COVID-19 pandemic. The company, over 80 years old, which ranked second in global car a/c compressor sales in 2019, booked a JPY17.3bn loss in its first three fiscal quarters between 1 April and 31 December 2020 on revenue off over 43% to JPY94.5bn.

Chinese home appliance companies continue to promote globalisation with more diversified cross border acquisitions, involving all supply chain links, but especially those related to core components, Zhou Nan, home appliance branch chief at the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, told Yicai Global.

For example, another major company, Haier, in recent years, completely took over NZ 'household name' appliance maker Fisher & Paykel, taking an initial majority stake and later the full 100%. That was just one of many M&As worldwide over the last decade or so.

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The pace is expected to increase, the report added. After China signed the Regional Comprehensive Economic Partnership in November 2020, leading electric appliance companies have more ways to go overseas, Zhou told Yicai Global, adding that, in December, Midea Group acquired Hitachi Compressor Thailand.

Hisense Home Appliances will enhance Sanden's profitability by sharing technology, supply chain, talent, and manufacturing resources while expanding, the statement added.