Luks Industrial (陸氏實業) – Maker of Etron TV

May 1, 2020 York Lo Articles, General, Hong Kong Companies, Manufacturing, Non-Hong Kong Companies, People, Property

York Lo: Luks Industrial (陸氏實業) – Maker of Etron TV

Left: Luks founder Luk King-tin (Capital, 1990); Right: logo of Etron TV from a 1988 TV ad in HK listing Luks as its manufacturer and Yin Kin Ltd as its distributors and being available in the Sheung Wan, Yaumatei and Mongkok branch of Wing On (VCRBase)

A history of television manufacturing in HK and China would not be complete without a profile of Luks Industrial, known for its “Etron” brand of television sets in the 1980s which was produced and marketed in China, HK, Southeast Asia and beyond and was also a major OEM supplier to Japanese electronic brands such as Aiwa, Akai and Benytone.

From Teaching to Construction to Plastics and Electronics

Luks was founded in 1975 by Luk King-tin (陸擎天, 1937-2015). A native of Gaoyao in the Zhaoxing district in Guangdong province, Luk was a teacher at his local secondary school after graduation and married Cheng Cheung (鄭嬙, 1940-), the daughter of a leading Chinese merchant in South Africa. Luk’s father in law visited China with the leaders of the South African government in the early 1960s and in 1962, Luk and his wife were given the permits to leave the mainland for Hong Kong.

As his teaching qualifications from the mainland were not recognized by the HK government, Luk started working as a stonecutter in HK at a monthly wage of HK$150 and was soon promoted to site foreman. Within a few years, Luk saved up HK$30000 from his work in the construction industry but with the real estate slump in the mid-late 1960s, he decided to switch to industries. He used his savings to start Luks Plastic & Metal Factory (陸氏塑膠五金廠) in a rented space on Larch Street in Tai Kok Tsui to make plastic cases for wigs, which was a booming industry at the time. (See articles) When the HK wig industry boom turned to bust in the early 1970s, Luks made the switch once again to making plastic casings for radios.

When the radio manufacturing clients were slow to pay the bills, Luks decided to go into the electronics business themselves and hired several engineers to make radios. In 1975, Luks Industrial was incorporated and the next year (1976), Luks Electrical Appliance Manufactory was incorporated, and Luks made its first million making liquid display calculators for exports to the US and Europe. (Tony Yu, Entrepreneurship and Economic Development in HK, 1997) This was followed by black and white television sets.

Pioneer in the China Market

When China first opened to foreign investors in 1978, Luks was quick to seize the opportunity and entered the market in 1979. In 1981, Luks began production of color television sets and in October that year, Luks formed Shenzhen Huafa Electronics (華發電子) in partnership with Shenzhen Electronics and Zhenhua Electronic Industry to manufacture 14-22” color TV with annual outputs of 100,000.

In July 1982, Luks received approval to establish a wholly-owned TV manufacturing plant in Shekou, which was managed by Luk’s brother Luk Hoi-tin (陸海天). By 1983, 70% of Huafa’s output were exported (primarily to Luks) and its output was expanded to 450,000 units per year. Luks also sold its TV under the Etron brand (Chinese name of 佳麗彩) in the mainland.

For fiscal year 1985, Luks recorded profits of HK$26.8 million. The next year, profits jumped 25% to $33.6 million with the mainland representing half of its revenues. The appreciation of the Japanese yen and Korean won at the time was beneficial to Luks in the mainland as Japanese and Korean TV sets became relatively more expensive. (WKYP, 1987-5-22)

Luk King-tin (center) with Antony KY Lo from Indosuez (later director of Luks from 1988 to 2002) and Luks managing director Choi Wang-yip at Luks Industrial press conference about its new strategic investors in December 1986 (TKP, 1986-12-16)

In November 1986, Luks announced plans to go public on the Stock Exchange of Hong Kong to raise HK$60-70 million with Indosuez as underwriter By that time, Huafa had factory space of 70,000 sq ft and 500 workers and bought a 140,000 sq ft factory to expand production and also built a 20,000 sq ft factory to manufacture plastic shell of TV sets. The wholly owned Shekou operations had 60,000 sq ft of factory space and 500 workers and was building another 32,000 sq ft plant for expansion. (TKP, 1986-11-29).

The next month (December 1986), Luks issued 10 million shares (5% of the firm) to the Japanese conglomerate Marubeni and 5 million shares (2.5%) to Dutch investment firm Oranje Nassau (advised by venture capital firm ChinaVest). (TKP, 1986-12-16)

In May 1987, Luks formed Benytone Luks (陸氏紅音), a joint venture with Marubeni subsidiary Benytone to manufacture hi-fi stereo equipment for exports in Shekou with Benytone providing the technology, design and orders and Luks handling assembly and factory management. The joint venture with Marubeni helped to expand the marketing of Luks TV sets to the US and European markets such as West Germany. The same time, Huafa expanded its production capacity to 800,000 color TV sets per year. (WKYP, 1987-5-22)

For fiscal year 1987, Luks recorded revenues of HK$880 million and profits of $81 million, despite of losses of $13 million associated with the stock market crash that year. By mid-1988, Luks’ television sets were sold in over 20 countries although 50% of its sales was still coming from mainland China and was projecting $1 billion in sales for the year. (TKP, 1988-5-21)

Luks Industrial celebrating 10th anniversary of its investments in the mainland in 1989. Luk King-tin was first from the left (WKYP, 1989-2-25)

In June 1988, Luks began selling its Etron TV (same English name but Chinese name of 佳樂 instead of the one they used in the mainland) in its home market of Hong Kong through Yin Kin Ltd (欣健有限公司, incorporated in 1980, dissolved in 2002) as the master distributor. The TVs were available at local department stores such as Wing On where a 20-inch remote control set sold for less than HK$260. (Asia Week, 1988) The launch campaign included TV commercials featuring Miss HK Pauline Yeung (楊寶玲) and Miss Asia Nina Li Chi (利智, wife of action star Jet Li). The same year, Luks established a joint venture with Akai Electric of Japan to make video cassette recorders (VCRs), making the firm the first local electronics manufacturer of VCR (FEER). By that time, Luks was manufacturing over 880,000 TV sets per year.

In February 1989, Luks raised $94.8 million through the issuance of new shares to fund the purchase of a godown in Tuen Mun and development of new markets. As a result, Luk King-tin’s stake at the firm was reduced from 48% to 44% (TKP, 1989-2-17) For the first half of 1989, Luks reported a decline of 48% in profits over the prior year due to the macro environment in the mainland which negatively impacted sales of its color TV sets and inventory level increased 35% over the same time the prior year. (TKP, 1989-9-23) Fortunately, business rebounded in the second half of the year and the firm also received its first order from Russia the same year. (later in 1991 the firm entered into collaboration agreement with its German client HCM to establish a color TV plant in Poland to supply the Eastern European market)

In 1990, Luks formed a US$10 million joint venture PT Dharmala Luks in Indonesia to manufacture color television sets and components in Jakarta with the Dharmala Group (which was also the Indonesian distributor of Luks’ Japanese partner Aiwa; Luks manufactured 200,000 TV sets for Aiwa at one point) controlling 51% and Luks holding 49%. (TKP, 1990-6-29)

In June 1991, Huafa received approval from the Shenzhen Stock Exchange to go public to raise RMB 90 million through the sales of 25% of the firm. Luks shareholders could subscribe to the IPO, making it the first time HK residents could participate in the trading of securities in Shenzhen. (TKP, 1991-6-21) The firm was listed in June 1992.

Exiting the TV business and Shift to Vietnam and Real Estate

In the early 1990s, Luks began to shift its focus away from television and electronics to real estate development in the mainland and industrial and property development in Vietnam. The firm was involved in the development of Lo Wu Commercial City (羅湖商業城, completed in 1994) and Jinfeng City in Shenzhen and residential and commercial projects in Chengdu and Wuhan.

In 1991, Luks formed a joint venture in Vietnam with Donaco Electronics Factory to manufacture color TV, tape recorders, hi-fi, calculators for sale in the local market. In 1992, Luks formed a 75-25 joint venture with a company controlled by the Ministry of Defense in Vietnam to develop a Grade A office building in District 1 in Ho Chi Minh City and another joint venture in the Hue province in central Vietnam in partnership with the Hue provincial government and Vietnam Frontier Fund to build a cement plant with annual production capacity of 600,000 tons. To finance all these large projects, Luks secured a syndicated loan of HK$360 million in December 1992.

In June 1996, Luks merged its TV manufacturing business which included its operations in HK, Shekou and Vietnam with the Chinese electronics firm TCL to form TCL International. As a result of the transaction, Luks became a shareholder of TCL International but TCL’s King brand replaced Luks’ Etron brand. The same year, Luks completed the construction of Saigon Trade Centre in Ho Chi Minh City and a cement plant in Hue.

In 1999, TCL International went public in HK and Luks divested its stake in the firm to reduce its debt. In 2001, Luks sold its stake in Shenzhen Huafa for HK$135 million and as a result completely exited the electronics business after a quarter century.

In 2005, Luks bought out all external investors in its cement plant in Hue. By 2009, the plant’s annual production capacity was expanded to 2.8 million tons. With the new focus in Vietnam, Luks Industrial was renamed Luks Group (Vietnam Holdings) Co Ltd in 2007.

In August 2015, Luk King-tin passed away and was succeeded by his wife as chairman of Luks and their children Luk Yan, Luk Fung and Monsie Luk are all executive directors of Luks responsible for property, cement and investor relations respectively.

Sources (other than those cited above):

www.hswh2003.com/displaynews.html?id=2361577818227584

http://www.luks.com.hk/html/about_milestones.php

This article was first posted on 1st May 2020.

Luks Industrial (陸氏實業) – Maker of Etron TV

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