See how the chairman of TCL Group has forged a tough company?

The market is constantly evolving, and TCL has been able to continue to develop today. The most important thing is that we have set long-term goals, consistently adhere to and actively adapt to changes. Doing business is a very challenging matter. It is a test of determination and endurance. Over the years, many companies have disappeared and declined from this market, largely because they failed to withstand tests when they encountered temptation or dilemma. Today, we are experiencing changes in the Internet. The Internet has changed the original rules and created many opportunities. These changes forced us to re-examine the relationship with users. As a manufacturing company, the product was sold out before, and the workflow was completed, but now the user bought the product may just be the beginning of a new business. A company providing smart terminals must provide services after providing products. Some people may regard new market trends as threats, but we think that establishing such Internet service capabilities is an opportunity. If you can't adapt to changes in the industry and you can't increase your ability in the process of each round of industrial growth, then it will be difficult for companies to survive for a long time. This is why we need to change strategic business units, increase application service business, and think about the future with a new perspective.

Planning to focus on cultivation

I have always been interested in technology. The university is a radio professional. After graduating in 1989, I originally had two very stable government units that I could go to. But I thought that sitting in the office was not suitable for me. Therefore, I volunteered to join a joint venture named TTK, becoming a technician.

TTK is the predecessor of TCL and mainly produces audio tapes. In fact, audio tapes disappeared 20 years ago. Eventually, optical discs gradually replaced tapes. However, the tape product brought us great profits in the 1980s. This is our first deposit.

Three years later, we turned to the second product, the telephone. I am the person in charge of this project and I am the general manager. At that time, I knew more about technology but I didn't understand business management. After completing the telephone product design and production line construction, due to some problems with foreign cooperation, I resigned after 9 months and left TCL. It was my first time as general manager and I was psychologically subjected to tremendous pressure and distress. Fortunately, after meeting a good leader, he was Lin Shusen and he was in charge of industry in Huizhou. In the following years, he took me to attract investment. I I learned a lot from it.

It is always good to have the opportunity to jump out and see. In the past few years, I realized that I had problems in managing my business and chose two courses: foreign economic law and industrial accounting. I think that companies must understand finance and understand finance. They must also understand the law, especially joint ventures and international business. If you do not have legal knowledge, it is difficult to make corresponding judgments. By 1989, I felt much better when I had the opportunity to return to TCL and do corporate leadership.

In fact, telephone products have developed very rapidly in China, and this market will soon be saturated. Next, we entered the audio and color TV market again. In 1993, I became the general manager of TCL Electronics Group. In the early work experience of TCL, I learned the most important thing: In the process of industrial change, if companies want to grasp the opportunities, they need to learn, establish new models, and continue to improve their ability to adapt Changes in this industry. In other words, companies need continuous transformation and upgrading, continuous innovation, which is the core to support the company going forward. On the other hand, I realized that doing business must be focused. In the early 1990s, there was a wave of real estate fever in China. At that time, many companies that did industrial development turned to real estate because real estate made quick money. But I did not go. I felt that my own resources were limited at that time. Only by focusing on one thing would it be possible to succeed. As a result, we focused our resources on the new business, namely color TV. TCL started color TV in 1992 and spent 5 years in the top 5 in China. Those companies that have switched to real estate are out of ten.

Only perfect and stick to the industry

If you pursue profitability as the only consideration, then there is no guarantee that every choice is right. The company's core competencies need to be established through long-term accumulation. Therefore, it is necessary to focus on doing business. This is the reason why the Chinese ancients said that they are “exclusive and unique”.

The first few years of our development of color TVs have been relatively smooth, but by the beginning of 1996, we have encountered a great challenge. Previously, we only sold in China, and did not have its own factory. Color TV production was provided by Hong Kong partners in domestic factories. There were unexpected circumstances, and the partner suddenly died in a car accident. This was a very sunny day for us. I consulted with his family and wanted to buy the company’s shares. It had already been talked about, but nobody knew that the competitors took the factory and bought the factory. This is equivalent to breaking my food channel and it was almost in desperate situation.

When I was desperate, it was a chance to let me know that there was a color TV factory in Shenzhen that wanted to sell. The owner of the factory, Lu Shi, was Hong Kong's first industrial company. I found him and said, "Land boss, how are we going to cooperate?" He said, "OK, this item I sold to you." However, I was only 100 million yuan at that time. If I bought a factory, I would not have money to develop it. . I told the land owner about the truth, hoping that he would be able to buy shares in the factory, and we would invest money and do it together. At first, he did not agree. Later, after inquiring about the industry, he felt that TCL was trustworthy and finally agreed. In this way, through the acquisition of Lu’s factory, TCL was able to turn into a crisis. In 1996, the price of color TVs in China rose sharply. We took advantage of a significant increase in market share to lay the foundation for TCL’s subsequent development in the industry. At the end of the same year, I began to serve as chairman and CEO of the TCL Group.

In the following 20 years, the consumer electronics industry has undergone earth-shaking changes. TCL and other manufacturers have experienced such a wave of baptism. As we early realized the importance of corporate strategy and brand, and established our own industrial capabilities and marketing channels, TCL can continue to evolve and grow in a constantly changing market. Although TCL's first 10 years of business was mainly an opportunity traction, we entered the 1990s with a gradual sense of strategic awareness and brand awareness. TCL was one of the earliest companies in China to introduce the VI visual identity system. At that time, it cost back 300,000 yuan to exchange dozens of copies of the VI booklet. Many people do not understand it, but I think the company must go long-term. This must be done because This means a brand new management philosophy.

Our initial sales system is a system under the planned economy. Products are sold to hardware delivery stations and supply and marketing cooperatives throughout the country and sold to end users. This system is not suitable for the development of the market economy. Many state-owned enterprises have been dragged down in this round of operations. TCL also lost a lot, so we decided to open branches in various locations. Starting from Shanghai, TCL quickly established its own marketing network throughout the country. By the late 1990s, after TCL became the leader in China's color TV industry, TCL began to pursue more ambitious goals - to become a leader in the Chinese electronics industry and to win a place in the global electronics industry.

This concept was gradually formed after China joined the WTO in 2001. At that time, we saw the general trend. The Chinese economy will surely integrate into the global economic system. The internationalization of Chinese companies is a big logic. Therefore, we must build our own capabilities based on the global industrial market layout. At that time, we were consolidating the local market and trying to find a way to accelerate internationalization. As a result, there were cross-border mergers and acquisitions in 2004.

Forge toughness timely recovery

In January 2004, we acquired Thomson Color TV. Three months later, we signed a cooperation agreement with Alcatel in Paris. The original intention of these two cross-border mergers and acquisitions was to create the internationalization ability of TCL. However, due to the out-of-control at that time, coupled with the great transformation of the industry after mergers and acquisitions, it caused the most difficult period in the history of TCL.

It was very attractive that Thomson was the company with the largest number of color TV patents, but its patents were basically concentrated in the picture tube. Two or three years after the merger and acquisition, the global color TV rapidly shifted from the picture tube to the LCD. Therefore, after the merger and acquisition, we face two major challenges: First, establish an international management capability. However, the conflict between Chinese and Western cultures is very large, and it is very difficult to operate smoothly. Second, the entire system of TCL needs to be rapidly changed to adapt to the rapid changes in the entire industry, market, and technology. As these two things happened at the same time, let us lose sight of one another.

As for mobile phone mergers and acquisitions, the price we pay is not too great. The main reason for the impact of the mobile phone industry is that after China’s accession to the WTO, the tariffs quickly dropped to zero, and foreign companies aggressively invaded the domestic market. The other 12 domestic companies that had obtained the mobile phone production license at the same time as TCL all collapsed, but our mobile phone business survived. Why? Because we have overseas markets formed by cross-border mergers and acquisitions, overseas businesses have also been able to recover quickly. Now, 85% of our mobile phone sales revenue comes from overseas markets, and almost all of our profits come from overseas markets.

Despite this, we still suffered a two-year loss after cross-border mergers and acquisitions. I remember that from the end of 2005 to the beginning of 2006, our team intensively held 6 meetings. Everyone calmed down to reflect on what went wrong with cross-border mergers and acquisitions, what did not do right, what caused the difficulties, and how the problems should be solved. Fortunately, when we faced such great difficulties, no one in the team chose to leave. Everyone resisted the pressure together.

With painstaking experience, we understand that one reason is that the internationalization of Chinese companies is an inevitable choice, but the path can be many. Since we have chosen cross-border mergers and acquisitions, we must stick to it. Since product technology needs to be transformed, we re-establish capabilities around the transition. The company must have the determination of the warriors to break their wrists. Even if the current period brings a relatively large loss, it must strive to ensure that the company's business remains healthy after the reorganization.

After we want to understand, we will implement it internally. I wrote some articles at the time and also organized a team to Yanan Bank to cheer for everyone. At the same time, some adjustments have been made in the arrangement of the company. In difficult times, we must take the initiative to shrink the scale. We must cash out some businesses and assets that can be realized and increase cash. Cash flow is the life of an enterprise. The company will not collapse because of a loss, but it will fall because of a cash flow break. Therefore, we have made positive adjustments around cash flow.

After finding a solution to the problem, everyone will be able to work together to restructure their capabilities. In 2007, we began to resume profitability. By 2009, our scale began to pick up. In the past five years, our scale has maintained rapid growth. In 2014, our sales increased to 101 billion yuan. In retrospect, at the beginning of cross-border mergers and acquisitions in 2004, we had sales of 8 billion yuan. At the peak of mergers and acquisitions, sales reached 50 billion yuan, and when the trough was 30 billion yuan, we now reach 101 billion yuan. Therefore, from a longer timeline, I feel that TCL’s cross-border mergers and acquisitions are strategically correct and that the costs are greater than expected.

Adapt to change and innovate

In the past five years, the consumer electronics industry has ushered in dramatic changes. The Internet has hit most companies, and some companies have even faded or disappeared in the course of industry changes. However, because of the huge market scale formed by cross-border mergers and acquisitions, we have been able to continue expanding in recent years. In 2010, TCL invested more than 20 billion yuan to establish Huaxing Optoelectronics. In the next five years, TCL has invested 66 billion yuan in the next-generation display field. Now, China Star Optoelectronics has brought us a lot of revenue, but it is not the end of TCL transformation and innovation.

TCL is entering a new phase. In addition to internationalization, we have also emphasized the strategic transformation of "double +" (product + service, smart + Internet) in the last two years. We hope to become a global group of intelligent product manufacturing and Internet application service companies. This is TCL's new corporate positioning. Focusing on Internet applications and services, we began to make some attempts and layouts 6-7 years ago. At present, we have formed three major service business areas. The first is the Internet Applications and Services Business Unit, including the most early support of smart TV, Huan Wang, and the world. Broadcast home theater, and we have been doing smart home. In addition to commercial and home use, we have partnered with Cisco to establish a smart cloud company based on the video communication technology platform. The second is the sales and logistics service business group, including Hanlin Hui and Cool Friends Technology (ie O2O business). The third is Internet finance. TCL originally had an internal service finance department. Now this project can be extended to provide services to related parties. In the future, we hope to provide services to users.

After many years of exploration, this part of the Internet application has generated nearly 400 million yuan in net income in 2014. In 2015, we expect that the Internet finance business will generate net profit of 700 million yuan. The Internet application service is not profitable for the time being, but its revenue is growing rapidly and users are accumulating rapidly. These are the results that can be seen, so we will continue to increase investment.

We now have a multiplied plan. We hope to use 3-4 years to double the size of the company. The annual revenue will reach 200 billion yuan, which will reach the scale of an international company. In fact, the doubling of scale is the result. The most important thing is that our own capabilities should be improved. In the future, TCL will also build four core capabilities in the areas of technology innovation, industry, global brands and channels, and Internet applications and services.

As I said before, the Internet has changed the rules and created many opportunities. If we want to make progress and continue to develop, the most important thing is not to avoid difficulties, but to overcome difficulties one at a time.