On Mar. 26th, TCL Communication (HKEX 2618), a holding subsidiary of TCL Corporation (Shenzhen Stock Exchange: 000100), released its 2008 annual report in Hong Kong. According to Hong Kong Accounting Standards, in 2008 TCL Communication achieved a net profit of HK$ 28.49 million; excluding effect of convertible bonds, profit after tax would have been HK$372,000; total sales volume (including mobile phones and data cards) swelled 15% year on year to13.695 million units, tripling the average growth rate in the industry. The company has achieved profit gain for three successive years.
According to the report, due to the improvement of product portfolio and the launching of medium to high-end mobile phone series, the company increased the average price and gross profit of products, with consolidated gross margin up 0.10 percentage point year on year, to 20.38%.
It is worth noting that while the global economy is experiencing staleness, the company achieved sales growth both in domestic and international mobile phone and data card markets; overseas sales volume achieved a year-on-year growth of 11%, to 11.969 million units; sales volume in China increased by 60% year on year, to 1.726 million units.
Contrary to a depressed global economy, TCL Communication’s overseas businesses maintained a stable growth trend which benefited from the sales growth in LATAM and EMEA markets. In LATAM market, the sales volume of mobile phones has been growing steadily for four successive years, up 15% year-on-year, to 6 million units. The sales volume of medium-end mobile phones in Caribbean, Venezuela and the United States accounts for 40% of overall mobile phone sales. In EMEA region, the company successfully entered into emerging markets like Africa and Middle East by introducing U8 series entry-level mobile phone and achieved considerable increase of sales volume.
“In 2009, TCL Communication will focus on maintaining existing market shares in overseas markets to minimize the impact of economic crisis.” At the same time, TCL Communication said the company will make more efforts in searching for new customers to maintain stable business and reduce reliance on certain customers to minimize business risk; strengthen product innovation, enhance technological level of products and improve product image to enable the company to compete with the 5 top brands.
“Last year we achieved a 15% increase while the average growth rate of the industry is only 5%. TCL Communication’s success is closely related to the gradual improvement of the corporate operation and supply chain efficiency,” said by Mr. Li Dongsheng, the Chairman of TCL Communication. According to sources, TCL Communication has been dedicated to improving the process and efficiency of supply chain since the beginning of 2008 to achieve the goal of “rapid delivery and efficient operation to create continuously leading competitive edges” in order to respond to market changes. The successful application of the electronic global supply chain platform significantly improved the sales and logistic efficiencies, which placed a solid foundation for the continuous, healthy development of TCL Communication. In 2009, the company will establish supply coordination system and global marketing demand coordination system.
As one of a few domestic manufacturers that possess core 3G technologies, TCL Communication achieved great breakthroughs in 2008. In the second half of 2008, TCL U398 was commercialized and selected as one of TD-SCDMA 3G mobile phones by China Mobile. This provided beneficial experience for the new business mode in the 3G era. As a tailored product developed by TCL Communication in collaboration with Anhui Mobile, T188 quickly seized the market after it was launched in Oct. 2008, creating a new cooperation mode between the company and mobile operator.
While global mobile communication industry is experiencing a developmental slowdown, the mobile phone market may shrink in 2009. However, the restructuring of the domestic telecommunication industry and upgrade of 3G network will provide new business opportunities for major mobile phone makers. Li Dongsheng added that in 2009, TCL Communication will seize the opportunity from the development of 3G mobile telecommunication industry and launch premier products to become a major player in Chinese mobile telecommunication industry in 3G era.
According to industry insiders, the acquisition of Alcatel in 2004 allowed TCL Communication to become one of a few domestic manufacturers that possess core 3G technologies, which provided beneficial competitive advantage for promoting 3G business via TCL mobile phones. At the same time, TCL has cooperated with telecommunication operators in overseas markets for years and established an excellent brand image. This suggests excellent performance of TCL mobile phone products in terms of 3G business.
