twice connect

TCL Chairman Looks To Build His Brand

1/10/2012 12:01:00 AM Eastern

NEW YORK — On a recent tour of major North American
cities to meet with partners, business and political
leaders, and fellow Chinese entrepreneurs, TCL chairman
and CEO Li Dongsheng said he expects to soon
build TCL into a prominent TV and cellphone player in
North America.

Li, who made an entry into the U.S. market several
years ago by licensing the RCA brand for television
products, said he realized that to be successful globally
the company will need to build and promote the
TCL brand with an appeal to younger audiences.

TWICE recently caught up with Li on a recent New
York City visit to get a look at the company’s next chapter:

TWICE: Why did you decide to give up the RCA
brand here?

Li: Our initial agreement with Thomson to license
the RCA brand was for five years. There was a longterm
vision to develop the TCL brand in the world. We
used the [RCA] acquisition to introduce TCL globally
and to implement a dual-brand strategy in a transitional
approach. Essentially, we used RCA to get to know
the local channels and markets.

TWICE: Do you see this year as a critical time to
build your market presence?

Li: Yes. The timing for a structural change in the industry
is very clear. The Japanese camp and European
brands right now are experiencing difficult times. On
the other hand, the Korean brands and the Chinese
brands are broadly increasing their businesses. Of
course, in the TV industry the shift from CRT to flatpanel
technologies and people upgrading their TVs
is creating opportunities for Chinese manufacturers
in this brand reshuffling. A couple of years ago TCL
invested close to $4 billion to set up an 8.5 generation
LCD panel factory, and that was a big step we took to
make our mark on the industry.

TWICE: You recently established your 8.5 Gen
LCD plant, but that technology has been around a
while. Are you concerned that new technologies like
OLED will quickly displace LCD?

Li: The timing for a Chinese company to make such
an investment was not late. We were one of the first
Chinese companies to make such an investment. The
demand in the Chinese market alone is still huge. Of
course, we also pay close attention to next-generation
display technologies, and some of the technology in
LCD is also used in OLED, so starting with LCD is a
good foundation for our involvement in future technologies.
But for the next eight to 10 years at least, LCD
will play an important role in the global market.

TWICE: In addition to TV, you are also looking to
build a market for your mobile phones here. Which of
the two do you see giving you the most opportunity
in the U.S.?

Li: We see both of these areas being very important
to us in the North American market. The businesses
are established as two separate legal entities in North
America, and we believe there will be more synergy
created between them as we go along with links between
smartphones, tablets and connected TVs.

TWICE: Do you have any specific market share
goals for either category?

Li: In TV we are looking to capture 10 percent of the
market [unit volume]. That is a must in order to achieve
the necessary economies of scale. I think we can achieve
this within three years, but our local sales and marketing
team believes that is a very aggressive number. I will be
meeting with them on the West Coast soon.

Our mobile phone business is a little bit different.
We have been running a very successful operation in
Latin America, but we just started in North America and due to the local economy our pace is a little bit slower
than we would like. Our branding strategy there is also different.
We have 20 year rights to the Acatel brand, which
is very important in the mobile phone market because it is
very well known by global operators who play an important
distribution role in that industry. So that is why we have
been very successful in Latin America and Europe.

In North America we are internally engaged in developing
a clear brand strategy. We are trying to create an edge
in a market that doesn’t have a lot of brands today, and we
are looking at the best timing to promote the TCL brand for
smartphones in North America.

TWICE: Why have Chinese companies collectively
shied away from aggressively advertising and promoting
brand awareness in North America?

Li: That is a question mark for me as well. In China the investments
in brand building are very large. Also, we have a
larger percentage of marketing investment in developed countries
in Europe. The dynamics in the U.S. market are very different.
For one thing, the margins are very low, but we also
understand that if we don’t invest in brand building over here
we will never make it to the second level, we will never enjoy
the benefits of brand training and the margins will never go up.
To achieve our goal of 10 percent market share we must make
the brand building investments. How, when and where we will
do that will be determined by our local marketing teams.

TWICE: You have said that you have chosen to work in
the low-end to the middle of the TV market with models
and pricing. Do you see that changing

Li: In time, for sure, we will develop production methods
in order to produce products with a better price-performance ratio. For example, through the establishment
of our 8.5 generation LCD plant, we will soon implement
modularly integrated product development so
that the module and TV are designed together to
improve our competitive cost structure. We will also
start to launch our new mid- to high-end products
with more functions such as 3D or smart TV.

TWICE: Do you see 3DTV developing into a big
market opportunity?

Li: We see it as another feature of an HDTV. Once
the price comes down a little more it will become
more widespread. Hollywood and the gaming industry
are promoting it more and more heavily. We were
the first manufacturer from China to have a universal
3D approach – meaning TVs based on active shutter
glasses, polarized 3D glasses and glasses free technology,
though glasses-free 3D was for commercial
use. This has been very popular in China.

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