BenQ files for German mobile unit's insolvency

29th September 2006, Comments 0 comments

29 September 2006, MUNICH - Taiwanese-owned BenQ Mobile GmbH & Co said Friday it had filed for insolvency for its German mobile phone handset business, paving the way for the closure of the former Siemens AG unit and casting doubt on the future of around 3,000 jobs. The move to shut down the unit comes just one year after BenQ acquired the loss-making mobile phone operation from Siemens and was accompanied by angry protests from union leaders. Siemens chief Klaus Kleinfeld expressed regret at the BenQ

29 September 2006

MUNICH - Taiwanese-owned BenQ Mobile GmbH & Co said Friday it had filed for insolvency for its German mobile phone handset business, paving the way for the closure of the former Siemens AG unit and casting doubt on the future of around 3,000 jobs.

The move to shut down the unit comes just one year after BenQ acquired the loss-making mobile phone operation from Siemens and was accompanied by angry protests from union leaders.

Siemens chief Klaus Kleinfeld expressed regret at the BenQ decision and said the giant German electronics and engineering position was considering taking legal action against the Taipei-based company.

"We are shocked by the development" he said, describing the application for insolvency as "incomprehensible."

In the meantime, Siemens has emerged as a focus of BenQ workers' anger at the insolvency move.

While a group of protestors gathered outside Siemens' Munich headquarters, Kleinfeld said that the original intention of the acquisition by BenQ had been to press on with the mobile phone business over a long period.

"In the light of the current circumstances Siemens plans to examine its legal position in relation to BenQ," he said.

At the same time Juergen Ruettgers, the premier of North Rhine- Westphalia, Germany's biggest state, where one BenQ plant is located, joined workers in protesting against BenQ and Siemens.

The board of the parent company, BenQ, decided Thursday to end investment in its German mobile phone offshoot, BenQ Mobile, which has also recently performed weakly in the intensely competitive global mobile phone market.

Benq Corp shares jumped by about seven per cent in Taipei Friday following the news that the group had decided to end the funding for its troubled German handset business.
After Siemens effectively paid BenQ to take over its mobile phone operations, the Taiwanese consumer electronics group had aimed to secure at least 10 per cent of the world market, but at the last count this figure was just 3 per cent.

BenQ plans to continue production of its BenQ-Siemens brand mobile phones in Asia, threatening the jobs of 1,400 working in the group's head office in Munich and factories in Germany.

Under last year's deal with Siemens, BenQ said it would guarantee jobs until mid-2006.

Meanwhile in Taiwan, BenQ Corp spokesman Eric Yu apologized to BenQ's German workers for BenQ's filing for insolvency protection for its German mobile phone business on Friday.

"It was a painful decision, but we had to do it because BenQ has lost 840 million euros (1.07 billion US dollars) since acquiring Siemens's loss-making handset unit in October last year," Yu said by telephone.

"We tried every means to stop the loss but couldn't, so we had to file for insolvency," he said, adding that BenQ had to shut its mobile phone production in Mexico and Taiwan earlier this year before filing for insolvency for its German unit.

Yu blamed the losses to the delay in research and development in handsets which delayed the products appearing on the market.

DPA

Subject: German news

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