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Interview with TCL Li Dongsheng: Overseas income accounts for more than half of the total, and it belongs to Chinese enterprises in the future.

via:博客园     time:2019/9/8 21:32:26     readed:170

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Author: "Deep net" Xue Fang

TCL founder Li Dongsheng and his TCL are still standing at the center of the global household appliances market.

In 2018, TCL sold 28.6 million sets of color TV products, ranking second in the world. There is no doubt that this year has 62 years old Li Dongsheng, is the enterprise circle labor model. Open Li Dongsheng's Weibo and find his travel footprints all over the United States, France, Poland, Spain and so on.

In the past few days, Li Dongsheng appeared at the 2019 Consumer Electronics Exhibition in Berlin, Germany (IFA for short). IFA is known as the exhibition.

In the process of globalization, Chinese enterprises have gradually increased their influence.

In an interview with Tencent, Li Dongsheng revealed that TCL accounts for more than half of overseas revenue and is growing faster than the domestic market. He believes that through the next wave of cycles, Chinese companies have the best chance of becoming a leader in the future.

To win in the competition, the most important thing is to be able to surpass in the field of technology.

TCL has been born for 38 years. Under the leadership of Li Dongsheng, TCL began to globalize, then entered the upstream of the industry, and then made breakthroughs in intelligent and Internet applications to catch up with Samsung and LG in the color TV market.

Exploring Globalization

On September 5,2019, on the eve of IFA's show, TCL made a lift in Berlin, Germany

This conference can be regarded as a projection of TCL's globalization achievements in the past 15 years.

The starting point for all this began with the 2004 merger. In 2004, TCL acquired Thomson (color TV business) and Alcatel (mobile phone business). Li Dongsheng became the first person for Chinese companies to go out. TCL acquired and reorganized the French television group Thomson's color TV and DVD business in Europe, and established TTL after the merger and restructuring of Thomson, the French television group.

But soon, Li Dongsheng was confronted with the first major crisis on the road to globalization. The color TV industry has rapidly transformed from CRT to flat panel era. Thomson has developed a wall-mounted back-projection TV with a thickness of 17 centimeters. Li Dongsheng feels that the performance-price ratio is high, but the market has not chosen him.

The change in the industry, coupled with international integration, the merger caused a huge loss to TCL, the 2006 annual report shows that multimedia (color TV) Europe lost as much as 2.596 billion yuan, in addition to multimedia, the group also lost 926 million yuan.

TCL executives are in turmoil, and people wonder if Li Dongsheng will be the next one to go. Li Dongsheng was very anxious. He couldn't sleep at night and lost 20 kilograms. This is his first loss since he took the helm of TCL.

Li Dongsheng is the first batch of college students after the resumption of college entrance examination. After graduation, he did not obey the distribution to the organs, but went to TTK Home Appliances Co., Ltd., the predecessor of TCL, a small workshop-like factory. He has been a technician, a salesman and a trader.

After 14 years of hard work, Li Dongsheng became the head of TCL in 1996. In June 2006, General Electric President Jack

Welch did not answer Li Dongsheng's question, but he came to a conclusion

Eagle's rebirth

To some extent, this article is a realistic metaphor of TCL's growth process. TCL experienced a life-and-death robbery after merger and acquisition.

Deep loss, timely stop loss, give up is perhaps the most effective way in the short term, the enterprise circle to make such choices are everywhere. But Li Dongsheng did not give up, he chose the strong man to break his wrists.

TCL has sold TCL International Electrical and Intelligent Building Business, and then computer business; in the mobile phone field, it can not recover the glory of 10 million units in 2003, but with the help of the Alcatel brand, TCL has received a large number of orders in the overseas market.

In October 2006, TCL announced a restructuring of its multimedia European business: ending sales and marketing outside the OEM business, in addition to shutting down six sales companies in Europe.

In the restructuring, 450 European workers were unemployed. In May 2007, TCL announced the retention of Polish factories.

At that time, Li Dongsheng was concerned about

Today, Polish factories play a role in the globalisation of TCL. Poland is located in Europe.

That M&A, which was once judged as a failure by the media and industry, is also the starting point of TCL globalization today.

Re-transformation

In 2009, Li Dongsheng made a huge impact on the future of TCL, entering the LCD panel. Li Dongsheng's reason for the most expensive area is that he does not have his own panel and chip technology and what TCL wants to compete with big companies such as Samsung and LG.

In 2009, TCL announced at Shenzhen High-tech Fair that it would invest 24.5 billion yuan to build TCL Huaxing 8.5 generation LCD panel production line. At present, TCL Huaxing has built and built six production lines, including LCD panels and AMOLED flexible screens, with a total investment of nearly 200 billion yuan.

At the end of 2016, Li Dongsheng became a little anxious and unable to sleep.

TCL has been hovering around 10 billion yuan in sales for three years. Gross margins are shrinking. It is very likely that a slightly inattentive team will fall out of 100 billion yuan. The rapid growth of TCL Huaxing has become the cash cow business of TCL Group, while the growth of intelligent terminal business such as consumer electronics, household appliances and telecommunications, which TCL Group once relied on for its livelihood, is weak.

Li Dongsheng was worried about it for a long time.

On the one hand, TCL has struggled for more than 30 years, on the other hand, it represents the future high-tech industry. The A-share system also makes TCL unable to separate TCL Huaxing business into separate listings. How to deal with these two businesses is the most thought-provoking issue of Li Dongsheng's time.

Two years later, Li Dongsheng made a decision.

On the evening of December 7, 2018, TCL announced that it would sell its smart terminals and related businesses to TCL Industries at a price of 4.76 billion yuan, including well-known TV, mobile phones, white electricity and other products. After the completion of the transaction, TCL Group listed companies will focus on semiconductor display and materials.

For TCL, this is a life-and-death change, but after the announcement, the market raised questions about Li Dongsheng:

In an interview with 21st Century Economic Report, Li Dongsheng described the logic behind the reorganization and separation.

Li Dongsheng expounded,

Li Dongsheng went on to say,

in that view of Li Dongsheng,

On the performance of TCL's share price in the domestic capital market, Li Dongsheng said that in terms of performance growth and dividend rate, he really did not understand.

But Li Dongsheng also stressed that TCL will never intentionally speculate in stock prices for its own benefit.

Following is Li Dongsheng's interview with the media, such as" Deep Network> ":

Media: Does TCL's overseas strategy have obvious stage characteristics? Can you elaborate on the characteristics of different stages and the overall strategy behind them, as well as the final considerations?

Li Dongsheng: TCL is one of the most globalized enterprises in China. After 20 years of hard work, TCL's globalized business structure has basically formed. We have more than 20 R&D centers in the world, nearly 10 manufacturing bases, and sales agencies in more than 80 countries and regions. Now we are further improving our layout.

In this process of development, we are to achieve the internationalization of the business, to the globalization of the entire industrial supply chain. Cross-border mergers and acquisitions in 2004 greatly enhanced our development momentum in this regard.

As a result, we look back on the 15 years after our merger and acquisition today, TCL's sales revenue structure of products, in 2018, sales revenue of overseas products accounted for about 50% of the total sales revenue of products. In the first half of this year, our sales revenue of overseas products also surpassed that of domestic products. Overseas business has become the biggest driving force for TCL's growth.

Media: in your previous interview, you said that in terms of the long-term globalization strategy, TCL will gradually turn to the TCL brand. This shift needs to have a process. How is this shift going now? can you say that the global strategy of TCL has been upgraded to the stage of global brand export?

Li Dongsheng: The foundation of our globalization strategy is that we should push our own brand, establish our own marketing network and establish our own industrial chain system. This is unswerving. Maybe we talked about this before. We have acquired some foreign brands through mergers and acquisitions. In the process of our global business, these mergers and acquisitions will continue to play their role for a considerable period of time, because local consumers may have a higher degree of recognition of local brands.

However, from a long-term development strategy, TCL will become a truly global enterprise from a Chinese enterprise. We hope to focus on the image of product business in TCL brand. This process has been pushing forward. In fact, TCL brand products sales have accounted for more than 60% of global brand sales. I believe that in a few years, TCL brand business will gradually replace the original market share of other M&A brands.

Media: this year marks the 70th anniversary of the founding of the people's Republic of China. What do you think of the global influence of these multinational enterprises rising in China and their future direction?

Li Dongsheng: In the past 70 years, especially in the past 40 years of reform and opening up, China has developed rapidly. China's global rise is all-round. First of all, economically, we have become the second largest economy in the world, and our economic growth rate is still among the top among the major economies. The development of China's economy and the enhancement of national strength also support more Chinese enterprises to become competitive global enterprises. I believe this process will continue in the future. So in China's advantageous industries, we are gradually catching up with the world's leading enterprises, or we have become one of the world's leading enterprises. This process, which will continue in the future, can not be stopped by any force.

In the future global industrial structure, the key for Chinese enterprises to have greater voice and competitiveness is to continue to improve their own capabilities. Especially the ability of technology development and innovation. Now technology is the main driving force in the competition of most industrial fields. In order to stand in this market and surpass the competitors in the competition, the most important thing is that you can surpass the competitors in the field of technology.

TCL also reflects such a trend on the side, this year is the 38th year of TCL growth. In fact, our technology accumulation in the past 20 years is not much, TCL has PCT patents, invention patents are rising every year. Over the past five years, the number of patent applications and patents granted by us has been several times the sum of our previous 30 years. This also reflects the growth trajectory of the whole Chinese enterprises from the side. The most important driving force to promote the growth of Chinese enterprises is technological innovation capability.

Media: what is the situation of Huaxing going to sea, production and sales?

Li Dongsheng: Huaxing's semiconductor devices are an intermediate product, which is mainly sold to TV manufacturers or display manufacturers, who make finished products and sell them globally. According to our statistics, more than half of Huaxing's display screens are sold overseas. In this proportion, Huaxing products actually sell more overseas than domestic sales. This also benefits from the large national development context.

Media: What kind of cooperation does TCL have with German enterprises or European enterprises besides competition among industries in Europe? What kind of effect will this cooperation bring to consumers?

Li Dongsheng: of course there is cooperation. We not only sell products in Europe, we have a Polish factory near Warsaw, which produces products that we import into Europe, mainly in the European Union. This factory, which has gradually increased in size in the past few years, is now the largest foreign factory in the main local city. At the same time, we set up an artificial intelligence research and development center in Warsaw last year. The R & D center has begun to take shape, and some positive progress has been made in the development of artificial intelligence technology.

Why is this R&D center to be established in Poland? Because there are more high-end mathematicians in Eastern Europe, there are more talents in the core basic technical ability of AI, that is, the big data technology. So as you can see, some of our AI technologies are developed by our European Development Center for AI in Warsaw.

At the same time, we have a 5G R & D center in Paris, France, in Germany, we have a good cooperation with German telecommunications, so our global business and export business, the biggest difference in international sales business is that we have to be able to take the root of our business according to the local market.

Media: Now the whole panel industry in the world is at a low ebb. Other Panel Companies in China are also predicting an improvement in the middle of next year. What do you think?

Li Dongsheng: It is not necessary to predict when the panel will turn better now, because the market is dynamic. In this process, there will be some variables, from the supply side, now the industry is low gross profit, a considerable part of the enterprise loss, this is a reality. In this case, some of the less competitive capacity may withdraw. Incrementally speaking, both the display application scenarios are increasing now.

Apart from the growing screen size of home TV, the most important increment is a commercial display. Some of the products we're showing this time are actually more suitable for commercial use. The application growth of a flat panel display product in many new commercial applications is very fast. Over the past few years, China's business market has grown by more than 30% annually, which can also absorb some of its production capacity.

It is also noted that Huawei has recently released smart screen and TCL has released our new generation of smart screen products. The target group of these products, customers are now very little TV watching mobile phone owners, we want to be able to better interact with the screen, give the screen more intelligent features. This will also lead to a new incremental market. So I am very confident in the semiconductor display industry, as for how long this trough is, it is hard to say.

In addition, I would like to emphasize that the semiconductor display industry is a high-tech, high-input and long-term industry, which is bound to fluctuate. The threshold for entry and exit of this industry is very high. China has two areas of semiconductor, one is semiconductor chip, the other is semiconductor display. China's current position in the field of semiconductor display will be able to make breakthroughs, this opportunity is the greatest. It is possible that we will become a leading country in semiconductor display in the world in three to five years. This leading position will enable the Chinese industry to play a more active and important role in the global semiconductor display.

Recently, there is a report, I think it is well written, that is, how to cross the low cycle of the industry, this article is written in place. Now is undoubtedly a downturn in the industry. For Chinese enterprises and their global counterparts, how to get through this trough? In addition, an important conclusion of its analysis is clear that the industry has a future. This low is caused by the relationship between performance supply and demand. The relationship between supply and demand is not only related to the rhythm of investment industry, but also related to current economic factors and market demand growth.

Which firms have a better chance of crossing the industry trough and becoming the leader in the next cycle? First of all, Chinese enterprises have the most opportunities. According to this analysis, the second one is that TCL Huaxing has the best chance. I have a strong foundation and responsibility to say this.

Media: After TCL Group stripped out the corresponding business, its main business is panel and ion display, semiconductor core brand. As you said just now, this is in the low ebb of the industrial cycle. In the medium and long term, how can TCL improve our overall financing capacity and valuation level?

Li Dongsheng: how to cross the trough, I have just said, the most important thing is two. We are facing the trough of this industry this year, TCL Huaxing, TCL intelligent terminal, we all put forward the slogan is

As you can see, Huaxing's annual report shows that our efficiency is the highest and our marginal contribution rate is the highest. To a large extent, thanks to our best, cost and efficiency work has achieved results. This work is not only done this year, but also started last year. It has been done all the time last year. If so, it will start in early 2017. As a result, it shows its advantages in the industry during the cold winter. Change, innovation, development, so-called change is that you have to optimize your organizational processes; innovation, in fact, technology is always the most important driving force; development, that is, we have to go from home to abroad.

The domestic market as a whole is growing slowly, so we have to open up more new markets overseas. Another development is to open up new business areas. You can see that the products we exhibit this time, in addition to the traditional products, we have a lot of new products.

These products belong to the development stage, if this product comes out in the future, our overall scale and performance growth will be faster. The same is true of Huaxing, which is innovating some new technologies and opening up some new markets. Therefore, in the face of the industry's downturn, the most important thing is to practice internal skills well and grasp a correct direction. I still say that in the semiconductor display industry, China has the most opportunity to take the lead in the future. TCL Huaxing is the most efficient and competitive semiconductor display industry in China. We will certainly be able to take the lead in crossing the industry's trough.

Media: you talked about the fundamentals of TCL before is very good, the stock price is so low, have you found the answer now?

Li Dongsheng: I haven't found the answer yet, because I am a scientist, and I don't know much about capital market, so I need to learn more. But I believe that the basic business fundamentals of an enterprise can eventually be reflected in the value of the enterprise. A good example is that Hong Kong's capital market is relatively rational, so Wang Chengzhong's performance this year is good, the stock price goes up, and our share price in Hong Kong surpasses our counterparts.

In China's stock market, I really don't know what to say. The figures are there. We have good growth. TCL Huaxing's sales revenue increased 33.5% in the first half of this year. This growth rate is higher than that of our counterparts. Our profitability has declined slightly, but my profitability is still the best among my peers. It is not others who have risen. I have declined. Relatively speaking, my profitability is improving.

My dividend rate is the highest again, so why the stock price does not rise, I really can not see, can not find out what the reason is. Now our capital team is trying to communicate in the market, this work is better done, we will try our best to communicate with investors, so that we can have a more comprehensive understanding of our company. The most important thing is that we should continue to work hard to do our business better.

What I just said is not to criticize the irrationality of China's stock market, but from what I have seen, the stocks of the more active companies in China's stock market should be long. Those stocks, like roller coasters, up and down, have a very large turnover, and the turnover of the more stable companies is not large, so it has no concept. 。 The so-called no concept, that is, no speculation, although in each speculation, we make a small number of money, loss of money is the majority.

So we are reluctant to join in this round of speculation, which may be the reason why our stock price is not performing well. Some organizations have come to us and said, Mr. Li, your share price is not so good. What kind of hype do you need to do? I think the stock price has risen very well, but the way he talks about it will be settled. It's against the rules, and it's going to go up, and it's going to come down in the end. I let most investors lose money. I will never do anything like that.

But in the Chinese stock market, there are a lot of people who do this, and there are a lot of hot money like to fix the stock. These people always think I'm the smartest of them. I'm the 10% or 15% who can make money. Although this is not the case, such stories are repeated over and over again in China's stock market. We see that nothing may change in the future, but we don't play the game. We hope that through our efforts, our investors, those who invest in our stocks will at least not be so risky. Now, according to the current stock price, our dividend rate is 3. 3%. If you buy treasury bonds now, you don't have a 3. 3% return. I have a dividend at 3: 00.

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