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TCL Corporation Adjusts its Industrial Structure to Separate Three Major Business Areas

January 22nd,2015

On January 22, TCL Corporation delivered an internal document to announce that it will adjust its existing industrial and business structure and divide its main industries, businesses, and enterprises into three major areas including a product business area, service business area, and venture and investment business area (namely three major business areas and “7+3+1” eleven business blocks). This serves to promote the transformation strategy of “Smart + Internet” and build up a new business mode of “product + service”, which will be more effective in building and presenting the value of different business blocks and expressing the industrial cooperation effect. According to relevant data, for details of such adjustment, TCL Corporation will divide its existing industrial pattern within the product business area and new business development into seven blocks. Among them, TCL Multimedia Electronics (1070.HK), TCL Communication Technology (2618.HK), China Star Optoelectronics Technology (CSOT), TCL Home Appliances Group, and Tonly Electronics Holdings Limited (1249.HK) will maintain their existing structures, while a commercial system business group and a component & material business group will also be newly built up.

It is known that the component & material business group will integrate with the environmental protection resource business of TCL, Jin Neng Battery, and TCL Display Technology (Huizhou) Co., Ltd. which each provide key components for consumer electronics terminal products. Meanwhile, the newly-built commercial system business group will include, with a B2B model as its core, Commercial Display, Ke Tian Mind Cloud Company, Military Electronics Industry, Medical Electronics, Lighting Company, and Hua Rui Photoelectricity, indicating that TCL might continue to invest more into such business sectors. Previously, TCL has cooperated with Cisco in order to set up a public commercial cloud service platform through joint investment, and they also plan to carry out deep cooperation in such areas as cloud computing, new-generation video communication, and interaction technique. It will also offer background support for implementing such projects as TCL Internet application service platforms, O2O platforms, financial service platforms, and big data operations. At the beginning of January, TCL also announced that it will carry out strategic cooperation with Wanda Group in order to proactively promote their cooperation in terms of commercial display, O2O, big data, and cloud service by utilizing their own resource advantages. It is indicated that TCL has already arranged Internet commercial layout in the smart community and B2B industry after it cooperated with Cisco and Wanda, became the second largest shareholder in Fantasia Real Estate Group, and bought the shares of Color Life, a benchmark enterprise as an O2O access community. Compared with the adjustments taking place within its product business area, TCL has made more obvious alterations in its service business area. In order to promote “Double+” strategy transformation, TCL established three major service business blocks, including a newly-built Internet application and service business group, sales and logistics service business group, and the financial business headquarters, which has already been founded. This resulted in the proportion of its service business being sharply raised within the total industrial structure of the Corporation. This block will also offer a one-stop plan from product experience, payment, logistics, and value-added service based upon users’ demands, which will enhance a new form of competitiveness for the Corporation. Especially in terms of user operation, the Corporation has already made some achievements. As of December 31, 2014, the Corporation’s smart television platform had already attained 6.747 million users accumulatively, and the number of daily active users was already up to 2.269 million. The corporation had accumulatively attained 11.556 million users via the smart network television terminal operated by www.tvhuan.com, and the number of daily active users was already up to 3.965 million. It is anticipated that it will gain large sums of operation revenue in 2015.

In addition, attention should also be paid to the great development potential of TCL’s venture and investment business group. According to the document, in future, venture business will mainly attach importance to the industrial distribution related to foresight and technical innovation, and it will also cooperate with and support the Corporation in regards strategic transformation and exploration of new business areas. For investment business, it will mainly focus on obtaining the best return from financial investment. TCL Corporation is an enterprise that has already set up a certain degree of competition barrier in vertical integration of hardware industrial chain. Its industrial investment and venture platform will probably become the essential means through which it overcomes the inherited disadvantage of being a manufacturer and promotes the buildup of its product and service ecosphere. It is looking forward to its development in such areas after having carried out successful investment into BestTV, Amlogic, FocalTech, and Color Life.

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