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TCL reaps rich dividends with partnership strategy

Updated: 2011-12-09 08:37

By Bao Chang (China Daily)

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Taking a cue from the success enjoyed by Hollywood blockbusters in China, many Chinese companies are now hoping to utilize global partnerships to make inroads in major international markets.

Electronics firm TCL Corp, which featured its new range of flatscreen televisions in the hit Hollywood movie Tranformers, is hoping to use its film partnership to spur sales in the US and European markets and has even used characters from the film to advertise their products.

In June this year, TCL signed contracts worth 300 million euros ($426 million) with nine Italian manufacturers and distribution partners. The contracts, which cover color TVs, mobile phones and home appliances, represent TCL's biggest deal in Italy since the company entered the European market in 2004.

"The long-term win-win partnership will promote TCL's sales in Italy and the entire European market," Li Dongsheng, chairman of TCL, said.

At the same time TCL will continue to integrate businesses and resources in Europe to make more inroads, he said.

Dott Antonio Arra, sales director of Laminox, based in the central Italian town of Sarnano and one of TCL's distributors in Italy, says that his company has been associated with TCL for more than five years now. "We are confident of continuing our association in the future."

TCL Communication Technology Holdings, TCL's mobile phone unit, has set up a design center in Milan to study the latest fashion trends, and is also working with Elle magazine, and Miss Sixty, a clothing brand, for product offerings.

Globally, TCL has interests spanning multimedia, communications, household appliances and electronic components. But in Europe, it mainly sells television sets and mobile phones.

TCL was ranked seventh globally in mobile phone sales last year, according to data from iSuppli, a US-based market research firm that provides reports on the electronics industry.

The company shipped 3.3 million units in the first quarter of this year to Europe, the Middle East and Africa - a 62 percent year-on-year increase.

"With more than 10 years of experience in developing overseas markets, TCL has established a global supply chain and production base," Li said. "Europe is a strategic and crucial market for our global presence."

In August this year, TCL teamed up with Rovi Corp, a US digital entertainment technology provider, for DivX digital televisions in France. Using Rovi technology, the new TCL television enables consumers to watch DivX format movies, the kind distributed by many online retailers.

"We chose to work with Rovi so that both domestic and foreign customers can enjoy online video and Hollywood movies without any technical obstacles," Hao Yi, vice-president of TCL Multimedia Sector, said.

It is not surprising that TCL chose France to launch the product. TCL had already acquired the mobile business of French company Alcatel in 2004 and set up TCL and Alcatel Mobile Phones (TAMP), a handset company. TCL Communication holds 55 percent of the shares and Alcatel has 45 percent. The new company's sales of mobile phones are expected to reach 20 million units annually, ranking first in China and seventh in the world.

TAMP launched the Alcatel One Touch Net mobile phone in June last year. It has a 3.5 inch display, a 5 megapixel camera and Alcatel's custom user interface. It costs about 180 euros off contract. The mobile phone boosted global sales of TCL Communication, which had 125 percent year-on-year growth last year, marked by sales volume exceeding 36 million units.

Last month, the sales of TCL's handsets and other products totaled 3.6 million units, up by 24 percent from July last year, TCL said. Of this, 3.1 million units were sold overseas, an 11 percent year-on-year increase. TCL has also agreed to a three-year deal with the Amaury Sport Organisation in France. TCL expects the agreement to boost its global image as sponsor of the 100th Tour de France in 2013.

However, the road leading into foreign markets has not been all that smooth. TCL and French company Thomson (now Technicolor) invested 470 million euros to establish TCL-Thomson Electronics (TTE) in 2004. Thomson held 33 percent of the shares and TCL 67 percent. TTE was expected to become the world's biggest maker of TV sets, producing 18 million a year and generating annual revenue of $3 billion. But the joint venture failed, weakening TCL's overall performance.

"Although the globalization process may meet with setbacks, we will go on deepening our presence abroad," Li said.

TCL said that during the first half of this year, the company had net profits of 539 million yuan ($84.3 million), up 241.67 percent from the same period a year ago. TCL Communication has maintained rapid development in the first half of the year, with sales revenue increasing year-on-year by 41.55 percent and 10.93 percent in overseas and domestic markets, respectively.