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TCL Plans Business Model Transformation

Shenzhen, China — TCL announced a shift in its global marketing focus Tuesday that will aim to capitalize on the “the new Internet economy.” 2/25/2014 09:19:00 AM Eastern

Shenzhen, China — TCL announced a shift in its global marketing focus Tuesday that will aim to capitalize on the “the new Internet economy.”

The group transformation of TCL Multimedia Technology, TCL Communications and parent company TCL Corp. will see the companies begin to execute a “double plus” strategy that includes
“intelligence + Internet” and “products + services” as main marketing directives, while “shifting from the previous product-oriented focus to a user-oriented focus.”

Gradually, the companies expect to transform TCL from a traditional TV manufacturer into “a global multimedia entertainment technology enterprise.”

The group said core values under the double plus strategy include “grasping opportunities arisen from digital media devices with a user-oriented focus,”
establishing a new business model of “product + services” and “leveraging (O2O) [online-to-offline commerce] to rebuild online and offline business platforms to become a pioneer in the Internet-oriented landscape.”

An increasingly popular marketing strategy in Asia, O2O finds consumers online and brings them into real-world stores. It is a combination of a payment model and foot-traffic generator for merchants, and a discovery mechanism for consumers that creates offline purchases.

The approach is said to be highly measurable, since every transaction happens online. This differs from a directory model through the addition of payment to quantify performance.

TCL said its five-year target aims at becoming a major global manufacturer of smart terminal devices, seeking to become a global top three brand in smart TVs and smartphones, accumulating a clientele of up to 100 million household users and 100 million mobile users, and deriving 50 percent of its profit from each of the product and services areas, respectively.

At the end of the day, the company said it expects to “grow more corporate value than sales revenue.”

TCL defined “intelligence + Internet” as the evolution of smart products and services tied to the Internet. The company said it will offer “ultimate experiences” while driving a major transformation of the company in the development of technologies and operations.

“Products + services” refers to a new innovative business model in the Internet era, which will transform the corporate level business model while “eventually establishing an open, collaborative and integrated business process and organizational systems serving needs of the strategic transformation,” the company said.

Behind all of this is the fact that overall growth in the global television industry is expected to slow down as competition intensifies in 2014.

“It is evident that the television industry is becoming intelligence-oriented,” the company said of its new mission statement. “Competition in the industry shifts from pure product features to positioning of the products in an intelligent ecosystem.”

TCL Multimedia chairman Li Dongsheng stated, “It is essential that traditional home appliance enterprises undergo a transformation of their business models. Firstly, as far as the market is concerned, saturated demand amidst growing production capacity intensified the price competition among enterprises. Secondly, with the industry, maturity of basic functions of hardware created a gridlock to development of the consumer electronics industry due to homogeneity of product functionalities. Thirdly, faced with cross-industry competition from Internet enterprises, the introduction of new business models has brought about challenges to the profitability of traditional home appliances enterprises.

“In view of the above, TCL will completely abandon traditions by adopting the Internet thinking, and establish the new business model by implementing the
double plus strategy, seeking to achieve a breakthrough in the strategic transformation in the Internet era,” the chairman continued.

Under the new three-year strategies, the group will leverage its existing advantages on hardware and services to provide a new business model on “products + user” and develop a new business model of “hardware + software + contents + services,” which will establish a product-driven structure with an emphasis on market insights, Internet-oriented layout and brand globalization.

Hence, through channel restructuring, establishment of an O2O platform, and improvements on the supply chain, efficiency enhancements will be realized, TCL said.

The group said it will also pursue intelligent operations based on entertainment. With an emphasis on user experiences, the group will continue to optimize its product portfolios of smart TVs and 4K Ultra HD TVs, building an all-in-one smart terminal product line integrating “platforms, contents, terminals and applications” that provide users with comprehensive entertainment solutions.

The TCL Group will also “proactively kick off development of its game businesses, vigorously develop operating platforms, strengthen its cooperation with Huan TV, Open and TCL Communication under TCL Group and proactively cooperate with third parties in integrating resources.”

Dongsheng said, “As the competition landscape of Internet TV becomes clearer, opportunities will emerge for TCL Multimedia in initiating transformations. The year 2014 will be critical for transformation of the TV industry. In light of this, we will adopt a new transformation strategy and Internet thinking, while striving to provide multimedia products and services that exceed users' expectations, with an aim to become a global multimedia entertainment technology enterprise.”

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