UNITED States appliance giant Whirlpool Corporation and China's Hisense Group will invest in a 900 million yuan (US$128.5 million) joint venture to serve the high-end washing-machine and refrigerator market.

The two companies signed an agreement in Qingdao, Shandong Province, on Monday, saying they will cooperate on research and development, production and procurement in the 50-50 venture.

The venture partners hope to achieve an annual capacity of 2 million washing machines and 1 million refrigerators, they said.

"The decision to join Whirlpool Corporation was made after consideration of the company's global position as the world's leading home appliance manufacturer with nearly 100 years of history," said Zhou Houjian, chairman of Hisense Group.

The deal is seen as a key step in Hisense's development at the global high-end whitegoods market after it acquired Kelon Electrical Holdings Ltd.

"Whirlpool provides innovative solutions, good quality products and leading technologies, which complements our philosophy and culture," Zhou said.

The two sides are expected to collaborate in more areas once the venture successfully taps into the global market.

As one of the most competitive whitegoods makers in China, Hisense embraced advanced technologies and realized consumers' demands, said Whirlpool Chairman Jeff Fetting. He said Whirlpool believed it was a smart decision to cooperate with Hisense.

Hisense Electric Co Ltd, Hisense's Shanghai-listed arm, yesterday reported that its first-quarter profit grew 56.13 percent to 204 million yuan and its sales gained 7.72 percent to 14.84 billion yuan.

Sales of televisions rose 5.83 percent to 11 billion yuan with margins gaining 2.73 percentage points to 19.4 percent, and refrigerator sales dropped 1.87 percent to 1.32 billion yuan with margins up 0.28 percentage point to 9.38 percent.

The company expects that its main operating income will grow 20 percent this year. It plans to invest about 650 million yuan in production lines over two years.