Analysis of Development Strategy of China's Household Appliance Industry

First, the TCL development process TCL meaning analysis: TODAYCHINALION. The 26-year development history of the Guangdong TCL Group since its establishment in 1981 can be summed up in three stages: the “telephone era”, “color TV era” and “electronic information industry era”. In the 1980s, TCL's original accumulation was completed with telephone production as the representative of the telecommunications equipment industry; from the early to mid-1990s, the brand strategy and marketing strategy were used to extend the TCL brand successfully to large-screen TVs for audiovisual products and electricians. Products and other areas, and build two major assets of TCL survival and development - brand and marketing network. Since 1997, it has integrated its brand market and capital operation advantages to fully enter the information industry and gradually form a diversified development of electronic information industry clusters. In 2005, TCL Group's main business income was 51.6 billion yuan, and TV sales reached 23 million units, becoming the world's largest color TV company; mobile phone sales exceeded 10 million, becoming an important competitor in the global mobile communications industry. The development of TCL is the epitome of Guangdong’s reform, opening up, and economic development. In the early 1980s, as the frontier of China's reform and opening up, Guangdong took the lead in opening its doors to the world and accepted the major shift of the world's labor-intensive industries, becoming a practitioner of the "three years and one supplement" export-oriented economy. For more than 20 years, Guangdong's gross domestic product (GDP) has increased by 85.7 times, with an average annual growth of 13.4%, creating a miracle in the history of the world economy. At present, Guangdong’s total foreign investment in actual use of fiscal and tax revenues per year accounts for 1/91/71/4 and 1/3 of the national total, which has an important position in the country.

How did the Guangdong economic miracle come about? From the perspective of economics, this is due to the large-scale investment of Guangdong's large number of cheap land laborers (including a large number of foreign migrant workers) and other factors of production. It is dependent on large-scale fund pulling (including absorbing domestic capital and overseas capital). In the early stage of development of TCL, implementation is an extensive growth model, mainly relying on factor investment and investment promotion.

Second, TCL development strategy analysis 1, the core strategy: independent innovation Modern industrial value chain research shows that the profits of the industry chain presents a "U" shape. In this "U" shape curve, one end is R&D design, the other end is sales service, and the middle is processing and manufacturing. In general, the profit rate of the two industries is more than 20%, while the profit of the intermediate processing and manufacturing industry is only 5%.

Case Study: The “BOSS” brand shirt sold on 54th Street in New York, USA is worth US$120. In gaining profits, channel distributors share 60%, brand owners account for 30%, and Chinese manufacturers can only get 10% profit. In the U-shaped value chain formed by the sales of technology R&D, manufacturing and marketing, our Chinese companies are at the lowest profit point. TCL has always regarded innovation as its strategic mission. Clear innovation strategy Improving the innovation system and huge R&D investment, especially the synergies between the French Thomson color TV business and Alcatel mobile phone's two major mergers and acquisitions, bringing technological advantages and its own technology accumulation for many years, has enabled TCL’s independent innovation capabilities to continue in the past two years. improve. In September 2005, Guangdong held a conference on “Improving the capacity for independent innovation” and pointed out that: Enhancing the capability of independent innovation is a deciding battle that is related to the future of Guangdong. According to the relevant data of the “2004-2005 China Regional Innovation Capability Report,” Guangdong’s innovation capacity ranks third in the country. In terms of specific indicators, "innovative performance" ranks second in the country, "knowledge acquisition" and "innovation environment" rank third in the country, and "corporate innovation" ranks fourth in the country.

The enterprise is the main body of technological innovation. Only through R&D investment and independent innovation can companies truly grasp their own destiny and gain the most favorable position in the global industrial chain. What is TCL's independent innovation power? "Science and technology are productivity." In order to get rid of the early mode of extensive growth, the space for future development of the extensive growth model is rapidly shrinking. At the same time, in order to get rid of the single profit model, we must look for new profit growth points. The TCL Group proposed a strategy of diversification based on color TV handsets and began to conduct large-scale independent research and development.

Another driving force of TCL's independent innovation comes from the white-hot market competition, especially China's round of home appliance price wars. Technological innovation is the driving force for corporate development. In 2005, the Ministry of Information Industry released data showing that China's electronics industry profit margin was only 3.3%, the lowest level since 1999. The electronic industry has encountered a profit crisis. The problem with exposing Chinese companies is that, due to excess capacity, the industry has become more competitive. Only by independent innovation and mastering core technologies can we seize the commanding heights of the market and profits. Nowadays, the real meaning of market monopoly lies in the monopoly of technology, market share is only a manifestation of technical monopoly, and profit is only a high return of technological monopoly. If Chinese companies do not strengthen their competitiveness in the entire industry chain, especially their product research and development capabilities, they will be subject to foreign restrictions. The stronger the weaker the weaker, the weaker the weaker “Matthew Effect” chain reaction. Vigorously improving the ability of technological innovation and creating independent innovation brands is the TCL’s fight for world market capital. The development of TCL proves that innovation is the life of an enterprise. Innovation can ensure the quality and reputation of a product. While TCL is increasing its investment in product R&D, it has also invested more in humanized design. Only by investing in more humanized design can we continue to maintain product leadership and constantly expand the product's new content so that companies can remain invincible in market competition. TCL Industrial Design has won awards in a number of international design competitions and has become the most awarded Chinese company. Not long ago, the development of dynamic backlight control technology for LCD TVs began to be licensed to the Taiwan region. Dr. Yan Xiaolin, the president of the TCL Industrial Research Institute, won the title of “Outstanding Independent Innovation of Chinese Enterprises” through this patented technology. TCL also ranks among the top ten independent innovation companies in the country.

2. Core Strategy 2: International TCL entrepreneurs have such a consensus: In the global economic integration today, Chinese companies must take the path of internationalization. TCL has been unwavering in its adherence to the internationalization strategy and has been striving for the establishment of an “internationally competitive Chinese enterprise”.

Maximizing scale is the precondition for TCL’s internationalization. In 2005, TCL Color TV sold 23 million units, becoming the world's largest color TV company; sales of more than 10 million mobile phones, becoming an important competitor in the global mobile communications industry, becoming a global business enterprise with a beginning of scale. TCL Group adopts the strategy of maximizing the scale and maximizing the concentration of industrial production, rapidly expanding production capacity to achieve economies of scale, thereby increasing market competitiveness and reducing corporate risks; and then using the “maximizing scale” benign effect to counteract product internationalization. Strategy advancement. The two promote each other and promote each other, making the TCL Group present a virtuous cycle of development. On the one hand, it has rapidly expanded its production capacity and achieved economies of scale. On the other hand, it has achieved cost sharing through scale and increased profit margins. The scale of TCL implementation is based on the rapid expansion of the market, through the economies of scale, lower operating costs, increase investment in technology, and maintain cost leadership. An important measure for the internationalization of TCL is the two major acquisitions of the French Thomson color TV business and the Alcatel mobile phone. Through the internationalization of foreign mergers and acquisitions products to promote the international market, and then through the internationalization of the market to achieve brand internationalization, to solve the business survival and development of strategic issues.

In developed countries, the virtual economy and the real economy have roughly a ratio of 5:1. The virtual economy has earned 95% of profits, while China's manufacturing industry has only scored the lowest 5% of profits in the industrial value chain. Actively develop overseas markets, expand the international perspective, and set about establishing a world brand image so as to maximize the value of profits. TCL in its future industrial expansion and diversified development and other investment areas, is also gradually changing from a labor-intensive and extensive growth model of the real economy to a science and technology content of high degree of virtual economy.

The reasons for TCL’s internationalization are summed up in three main points: First, it has obtained stable and diverse foreign resources and raw material supplies to cultivate China’s “world factory”. 60% of China's foreign investment is mainly used for this purpose. Guangdong TCL is no exception. At present, this household appliance company in Guangdong, which started in Huizhou, has 17 production bases and 63,000 employees worldwide, of which over 10% are overseas employees. Second, internationalization is a way for Chinese companies, including the TCL Group, to acquire intellectual property rights for the core technology fixed sales network and establish an international image. At present, TCL has sales organizations in 45 countries and regions in the world. It has a global research and development organization in France, Singapore, and other places in the United States. It has 4,000 international R&D personnel, operates internationalized markets, and sets up TCL to create a brand-name international image. Again, internationalization is the direct result of China’s economic expansion. The productivity of Chinese enterprises exceeds the growth of domestic demand, especially in the manufacturing industry. There is an urgent need to find new markets, and internationalization is a solution. The top 50 companies in China all regard "finding new markets" as their primary goal. In 2005, TCL Group's main business income was RMB 51.6 billion, and overseas markets exceeded 53%. At present, the company's overseas sales of three kinds of color TV mobile air conditioners have surpassed the domestic market and have become a global business enterprise with a scale. TCL has initially established a global business structure and achieved a global business layout.