Two years is a long time in business, more so if it's the business of marketing mobile phones. In that time, Chinese mobile phone manufacturers have seen a sharp reversal in their fortunes, hobbled by technological advances.
In many ways, the rise and slump of TCL Mobile, one of China's top television manufacturers turned mobile phone maker, is emblematic of an industry under serious threat from multinational challengers. Along with Ningbo Bird and to a lesser extent Panda and Amoi, the six-year-old Hong Kong-listed TCL initially led a robust counterattack on foreign contenders. It invested in research and development, established a joint-venture with French telecoms equipment manufacturer Alcatel and launched concept-driven handsets such as a diamond-studded model, laying the groundwork for a promising future in the crowded handset segment.
In many ways, the rise and slump of TCL Mobile, one of China's top television manufacturers turned mobile phone maker, is emblematic of an industry under serious threat from multinational challengers. Along with Ningbo Bird and to a lesser extent Panda and Amoi, the six-year-old Hong Kong-listed TCL initially led a robust counterattack on foreign contenders. It invested in research and development, established a joint-venture with French telecoms equipment manufacturer Alcatel and launched concept-driven handsets such as a diamond-studded model, laying the groundwork for a promising future in the crowded handset segment.
Initially, TCL's game plan, its attractive price points and its distribution clout in tier two and three cities delivered the sales. But in the last two years, foreign competitors have whipped their China strategy into shape to draw blood.
Motorola launched the cutting edge Razr, while Nokia reshaped its distribution and unveiled an emerging market operational strategy allowing it to compete with handset prices as low as Rmb 500. "In China, the high-end brands do well and the low-end models do shockingly well, but it's the middle ground inhabited by TCL and its domestic peers which gets badly squeezed," said Quinn Taw, MindShare's managing partner.
On top of that, TCL is clearly hobbled by technology. Industry observers note that TCL phones are about a generation behind on the tech curve and the disbanding of the Alcatel JV could prove a major setback. Grim prospects at home have led TCL to look overseas to India and Vietnam for relief. But with the number of mobile phone users in China forecast to rise from 370 million to 650 million in three years, TCL will need to overhaul its business model and sharpen its brand if it is serious about becoming a leading handset marketer.
