(Yicai) Aug. 19 -- Even though China Resources, one of China’s biggest state-owned conglomerates, took control of Konka Group last month, industry insiders caution that even with deep-pocketed backing, the struggling television maker’s road to profitability remains a steep one.

China Resources’ takeover will alleviate some of Konka’s financial pressure and help it integrate resources, but the television giant’s new management team will still face challenges, as the difficulty of turning its main business profitable remains substantial, Dong Min, secretary-general of the China Video Industry Association, told Yicai.

Konka expects to have logged a net loss of between CNY360 million and CNY500 million (USD50.1 million and USD69.6 million) in the first half of the year, mainly because of the intensifying competition in the consumer electronics market and the fact that the company’s semiconductor business failed to achieve profitability, as it is still in the early stage.

TV makers can only enhance their profitability by promoting high-value-added products, such as ultra-large and mini light-emitting diode-backlit models, Peng Xiandong, general manager of the large home appliances division at Chinese market research firm Growth From Knowledge, told Yicai. With the application of artificial intelligence technology, the integration of TVs, large home appliances, and smart homes is also deepening, he added.

After China Resources’ takeover, the top priorities will be to enhance Konka’s technological and product innovation capabilities and accelerate its internationalization process, according to Peng.

In April, Overseas Chinese Town Group, another central SOE under the State-Owned Assets Supervision and Administration Commission, agreed to transfer its controlling stake in Konka to China Resources to advance the specialized integration among SOEs and optimize the allocation of resources.

The transaction, which was completed in July, resulted in a change in actual controller to China Resources from OCT Group. However, Konka’s ultimate controlling body remained the SASAC.

On Aug. 14, Konka announced the election of a new board of directors, with China Resources Pharmaceutical’s former Chairman Wu Jianjun appointed as new chairman and legal representative of the Shenzhen-based firm. Among Konka’s five senior executives, two have worked for China Resources.

This new staff arrangement is conducive to maintaining operational continuity at Konka while also facilitating the integration of China Resources’ resources, Dong noted.

Konka’s shares [SHE: 000016] were trading up 2.6 percent at CNY5.61 (78 US cents) as of 10.30 a.m. in Shenzhen today.

Editor: Futura Costaglione