Guangdong Midea Electric Appliances Co. Ltd (Midea) will integrate all of its washing machine business into Wuxi Little Swan Co., Ltd to end internal competition, according to a Caijing report Friday. Midea is one of Little Swan's shareholders.

An electrical appliances analyst who declined to be named told Caijing that the internal competition between the two companies has been puzzling the two companies for years. Previously there were rumors that Midea would not only integrate its washing machine business into Little Swan, but also integrate with Royalstar Group, Midea's fully-owned subsidiary, into Little Swan to settle the problem of internal competition.

Bi Yan, an electrical appliances analyst from Merchants Securities said that if the rumor is true, undoubtedly, this deal is good for Little Swan. As for Midea, it can increase its shares in Little Swan so that it can gain from the latter's profit growth.

He added that the key to this deal lies in the evaluation of assets of Royalstar's washing machine business and how many more shares Midea can get from Little Swan. The number of increased shares needs to be agreed upon by both shareholders of Midea and Little Swan.

Midea Board Secretary Li Feide did not give direct answer on whether the deal was true when interviewed by Caijing, only saying the company is working on the initiative of integrating Midea with Little Swan at present.

At the beginning of this year Midea began reforming its marketing system and has established more than 50 regional sales companies in China. Midea has integrated the sales of refrigerators into the system in the first half of the year and they will do the same with washing machines next.

According to the unnamed analyst, these 50 sales companies were established by the core distributors of Midea and the shares of these companies are all independent from Midea and Little Swan.

The two companies announced Thursday that they will suspend trading from Friday because Little Swan is undergoing big asset restructuring and would resume trading before October 21.

Midea holds a 29.64 percent stake in Little Swan, 24.01 of which are shares, and the rest are through Midea's subsidiary.

Li Na contributed to the stroy