Hou Songrong, Konka's deputy managing director, said Konka would not retreat from the color TV sector although that area has cost the company heavy losses.

The Economic Observer newspaper reported on Monday that Konka's TV business will be purchased by TCL, another domestic industrial giant, a claim Konka emphatically denies.

"There is no such thing. Until now, the company's board has not spoken to other companies about buying our color television business," said Hou.

TCL has refused to comment on the reports.

Hou said he is eager to find the source of the rumours. Insiders said Konka's profit dive in the past two years and weak demand in the domestic color TV industry have helped trigger the report.

The firm, based in Shenzhen in South China's Guangdong Province, said last month pre-audited results showed a significant loss in 2001 as intensified domestic competition squeezed profit margins.

A fierce price war in the oversaturated color TV market has weakened industrial leaders including Konka, Changhong and TCL.

In 2000, Konka's net profit fell 47.7 percent to 260.4 million yuan (US$31.45 million). The firm is scheduled to release its 2001 results on March 23.

Hou said Konka is still confident it will continue its lead in the TV business with a market share of 18 percent, and will also focus on digital TV this year.

"We have made preparations for a new beginning after we sold 1.5 million TV sets at lower prices last year, which is also the main reason for the loss," he said.

He said Konka was not actively seeking any strategic partnership but would consider offers as they came along.

(China Daily March 1, 2002)