TCL, Thomson Deal Makes World's Largest Television
Manufacturer
TCL, China's largest television maker and French company
Thomson have created a new company, TCL-Thomson, which
will be the world's largest television maker. The new
company will have about 20,000 employees and will ship
about 18 million units annually, making it the world's
largest television maker by volume, and will have sales
of more than US$3.5 billion annually.
The value of the venture will be at least US$520 million.
After 18 months, Thomson will have the right to swap its
holding for shares in TCL International Holdings Ltd.,
which are listed on the Hong Kong Stock Exchange.
Thomson has been re-positioning itself as a digital media
services company, and will be able to get rid of its manufacturing
operations, which will be injected into TCL-Thomson. TCL
has been in television manufacture for 11 years, and will
leverage its experience and strength in manufacturing
and cost accounting to sell televisions.
Thomson owns two leading television brands, Thomson in
Europe, and RCA in the US. The RCA brand is respected
as one of the oldest brands in televisions in the US,
and commands a 13 percent market share.
The two companies have manufacturing facilities in China,
France, Mexico, Poland, Thailand and Vietnam, and it is
likely that there will be some consolidation of manufacturing
facilities. Major US retailers have put unrelenting pressure
on makers to cut their prices, and that has benefited
manufacturers with major facilities in China, which benefit
from a large domestic market.
For TCL, the deal represents an opportunity to transform
from a Chinese company to a global company. Chinese companies
take advantage of their manufacturing expertise and huge
domestic market to build presence; now more want to stretch
their wings and become global companies.
The traditional route would have been to focus on certain
foreign markets, and build brand recognition. This is
a long, slow and expensive process, especially when the
newcomer has to fight established brands. For a business
challenged by low margins, such as television manufacture,
a brand-building strategy would have quickly forced it
into the red.
As a result, TCL opted instead to partner with Thomson
as a way to quickly expand into major international markets.
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