Our Directors believe that we will continue to see growth in demand for our products and services in the foreseeable future. Sales of our electronic tuner components have grown at a compounded annual growth rate of 46.8% per annum from FY2002 to FY2004. In FY2004, electronic tuner components accounted for 92.3% of our total sales. Sales from other products and services increased by 82.6%, from RMB 13.1 million in FY2003 to RMB 23.9 million in FY2004. Barring unforeseen circumstances, we believe the following to be positive factors, contributing to the prospects and continued growth of our Group in the foreseeable future.
Digitalisation
With advances in technology in the field of electronics, we observe a trend towards the digitalisation of electronic products. As such, our Directors believe that increasingly, more digital technology-based electronic products will be made. As the electronic tuners used in analog systems differ from those in digital systems, the transition to digital-based technology in electronic products will likely lead to an increase in demand for tuners to be used in digital systems. For instance, with the advent of cable, digital and satellite television technology, the need for set-top boxes increases as they are required to convert digital signals to signals receivable by televisions. Typically, audio and video products (such as television and radio) require one electronic tuner while a set-top box requires two or more tuners for reception of different digital signals from broadcast such as satellite, Internet or cable. This would stimulate the demand for electronic tuners. We believe this trend augurs well for our business, as our customers are mainly manufacturers in the consumer electronics industry. These customers include the Sharp Group, the Samsung Group, the Panasonic Group and the LG Group.
Entry into New Markets
Based on our experience in the manufacture of electronic tuner components for the consumer electronics industry, we believe that our capabilities in precision die-casting, metal stamping, plastic injection moulding, automated assembly and electroplating will enable us to expand our businesses to other industries by providing the required products or services. We have made inroads into markets such as the automotive, office automation equipment and telecommunication industries. In addition, we believe that there will be increased demand for automotive products partly due to increased investments in the PRC by major automobile manufacturers. With our dedication towards operational excellence and our efforts to acquire more advanced technology, coupled with a continual outsourcing trend, we believe that we are positioned for growth in the automotive market. Furthermore, with our track record, we believe that we are able to secure more businesses from customers, both existing and potential, in these industries. We have subsidiaries located in Cixi City, Zhejiang Province, Suzhou City and Wuxi City, Jiangsu Province and Dongguan City, Guangdong Province that are positioned to tap into the markets in the industralised regions, namely the Yangtze River Delta and Pearl River Delta regions.
We entered into a collaboration agreement on 17 October 2005 with Jurong Hi-Tech Industries Pte Ltd, a wholly-owned subsidiary of Jurong Technologies, whereby (1) Jurong Hi-Tech Industries Pte Ltd and our Group would each act as the preferred sub-contractor to the other and its respective customer base, and (2) Jurong Hi-Tech Industries Pte Ltd (and its other collaboration partners) and our Group agreed to jointly carry out product development in original design manufacture of PDP and LCD products and businesses, as well as accessories for telecommunication products, such as Bluetooth consumer products (e.g. Bluetooth headsets), Global Positioning Systems and antenna modules for telecommunication products. We believe this collaboration would give rise to synergistic benefits to us in our long-term strategy to expand into our other business segment, in particular, the manufacture of connectors for the mobile phone and hard-disk drive markets in which Jurong Hi-Tech Industries Pte Ltd has a well-established presence.
New Products
We have commenced production of new products such as SIM connectors, Board to Board connectors and FPC-connectors. These new products are used in equipment such as mobile phones and digital products such as digital cameras and DVD players. In addition, with the development of precision engineering industries in the PRC, we have received enquiries from our customers, including MNCs, to manufacture moulds for their products. We may supply them with the required moulds.