The Change Mariner

Chinese TV firm poised to bypass Sony

Rutland Herald:
Only two decades ago, it was a small electronics workshop in a warehouse. Now, it’s an industry powerhouse poised to displace Sony Corp. as the world’s No. 1 television maker.

The growth of TCL is a homegrown success story of modern China, where manufacturers are elbowing leading Japanese electronics giants aside.

Just as Sony and Panasonic once edged out top American brands, Chinese brand names like TCL, Haier, Konka and Midea are positioning themselves for a broader push into world markets. While they still sound unfamiliar to Western consumers, they’ve already gained a foothold in Asia.

Now, they’re positioning themselves for a broader push into world markets. On Tuesday, TCL International Holdings Inc. and Thomson SA, the French company that owns the American television brand RCA, announced a joint venture to produce 18 million TV sets and up to 4 million DVD players a year. Annual revenues are forecast to exceed $3.49 billion.

Thomson now sells 7 million RCA televisions a year worldwide, including some under the GE brand in the United States. TCL, China’s second-biggest maker of TVs and cellular phones, exports about a third of the 10 million sets it makes each year. TCL was founded in 1980 in Huizhou, an electronics export base in southern China’s Guangdong province. At the time, U.S. giants like RCA were beginning to shift their manufacturing to the cheap-labor operations of Mexico.

But China’s economics soon lured manufacturers there. According to official Chinese estimates, the average manufacturing wage is 61 cents an hour, compared with about $2.50 in Mexico and $16 in the United States.

“Consumer electronics left the United States long ago, and now production is being consolidated in China,” said Andy Rothman, China strategist for CLSA Emerging Markets. “There clearly is a shift to China as a major manufacturing platform for world consumption.” The Chinese government is encouraging Chinese companies to expand overseas, partly to counter rising trade friction.

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