TCL must preserve its brand on global stage

TCL, which started life as a simple cassette producer in 1981, is now one of the biggest TV and mobile phone vendors in China, selling televisions, DVD players, personal computers and handsets. The company posted a 51 per cent jump in the first-quarter net profit to Rmb 247.58 million (US$29.9 million) this year. Although the figures suggest robust sales, the company is now facing a drop in market share in China. According to industry figures, TCL has slipped to fourth place from second, with 9.8 per cent share of China's handset market in February. Finnish giant Nokia remained the top seller with 12.2 per cent share, closely followed by local brand Bird and US giant Motorola. To stem the slide, TCL -- which has seen a series of changes of its marketing department in the last two years -- has taken action. It hired Leo Burnett to handle its creative assignment, filling a gap left vacant since previous incumbent, J. Walter Thompson's contract expired in March this year. TCL has also demonstrated it also has global ambitions, which may be more difficult to realise with China generating 70 per cent of its sales. Expanding overseas is no doubt an expensive undertaking and may be difficult to fund as TCL's local market share continues to slide. The Chinese market for TV, DVD players and mobile phones is intensely competitive. Profit margins are thin and getting thinner. Price wars in China are brutal. Recently, TCL formed a joint-venture with French electronics maker Thomson. TCL is banking on Thomson's sales operations in Europe and US, to pave the way for its international foray. TCL is now using its own branded product to enter markets in Southeast Asia, India, Russia and the Middle East. The company's strategy in Europe and US lies in acquiring companies and to use the acquisition's brand name to build up TCL's presence. But the strategy is not without its risks since its hold on the domestic market is far from assured and repeated changes in its marketing team will hinder development of a robust brand.