Genisco Close to Signing Joint Venture With China

A joint venture agreement between Genisco Computers Corp. and a computer company from the People’s Republic of China is moving a step closer to completion as a result of meetings being held this week between representatives of the two companies.

Peter J. Shaw, president and chief executive of the Costa Mesa-based company, said Genisco and Hunan Computer Co. plan to create a new company, Genisco China, in Hunan province to manufacture and distribute Genisco’s computer-aided design and graphics equipment.

Shaw said Genisco, a subsidiary of Genisco Technology Corp. of Rancho Dominguez, is considered to be the first U.S. computer graphics company to strike a deal with a Chinese concern. Shaw said the agreement represents a large potential sales source for Genisco, which has not generated significant revenues since its creation in 1972. In its last fiscal year, sales were $13 million.

However, Shaw said he was unable to estimate the value of the deal, which does not become final until Genisco wins several export licenses from the federal government. According to Shaw, some licenses have been approved already and the remainder are expected over the next several months.

The agreement, tentatively approved by the two companies last October, initially calls for Genisco to ship two of its graphic product lines to Hunan for distribution in China. Potential customers of the equipment, Shaw said, include architectural, construction and clothing design companies.

Later, Genisco expects to use the Chinese company as an offshore assembly plant for products it then will import into the United States for sale. Under the final part of the proposed deal, the Chinese company would actually develop and manufacture its own products for distribution both in China and the United States.

Although the current round of talks between Genisco and Hunan are scheduled to end Thursday, the agreement calls for representatives of the Chinese company to return in September for discussions on customer service.