This is the second consecutive year that Li Dongsheng, deputy to the National People’s Congress, founder and chairman of TCL, has made suggestions on “globalization”.
At the two sessions of the National People’s Congress last year, he made suggestions to support Chinese enterprises to accelerate globalization. This year, he further suggested at the national two sessions to promote the upgrading of China’s manufacturing industry and build a global industrial chain.
The world is experiencing great changes that have not been seen in a century. Under the new trade rules, the globalization situation faced by China’s manufacturing industry is becoming more and more serious. How to break the ceiling of internationalization has become an urgent problem for China’s manufacturing industry, which is also an important reason for Li Dongsheng’s suggestions on “internationalization” for two consecutive years.
From the perspective of TCL itself, the internationalization of TCL has taken steps since 1999. Starting from entering Vietnam, TCL has more than 20 years of experience in globalization. In this process, TCL has paid “heavy” tuition fees and choked water, but it has also learned to “swim” in the global market.
In 2021, TCL’s overseas revenue is expected to exceed 110 billion yuan, with a year-on-year increase of more than 55%. “A very important reason why we can achieve this growth is that we have done a relatively solid job in the global industrial layout, global operation ability and global industrial chain and supply chain system.” On March 1, Li Dongsheng said in an interview with the reporter of the daily economic news.
“In terms of economic globalization, our cognition needs to be changed.” Li Dongsheng said that the original globalization mode of China’s manufacturing industry must be changed from “exporting products” to “exporting industrial capacity” in order to break through the ceiling in the international market.
from exporting products to exporting industrial capacity
During the two sessions this year, Li Dongsheng brought a total of five suggestions. It not only includes social and livelihood fields such as combating cyber violence, but also focuses on industrial development fields such as made in China. In his view, building a global industrial chain is an important means for China’s economy to break through the ceiling in the future.
On the afternoon of March 1, Li Dongsheng deeply expounded his thoughts on the new situation of globalization and TCL’s coping experience.
He told the reporter of the daily economic news that the anti globalization tide generated by the superposition of the epidemic and trade protectionism will bring regionalization and short chain of industrial chain, which is the biggest risk faced by the globalization of China’s manufacturing industry. “Facing the trend of anti globalization, China’s manufacturing industry should be more active and promising.”
Li Dongsheng said that China is a large industrial manufacturing country, and its industrial output accounts for nearly 30% of the world. China’s huge industrial capacity must be digested in the global market, so globalization is bound to be one of the main ways for the future development of Chinese enterprises.
He further pointed out that the current global trade rules are changing, and Chinese enterprises should adapt to this new change and change from exporting products to exporting industrial capacity. Chinese enterprises must clearly realize that if they still follow the traditional way of product export to globalize, “the growth of overseas markets has reached the ceiling”. Because developed countries have realized the problem of industrial hollowing out, while other developing countries are also worried that their manufacturing industry is difficult to compete with China.
The reporter also noted that in recent years, “not only selling products, but also creating value for exporting countries” has gradually become the consensus of some Chinese giants in the layout of overseas markets.
Li Dongsheng concluded that TCL has three experiences in dealing with the risk of anti globalization. First, adjust the layout of overseas industrial chains and effectively avoid trade barriers. “We have built and expanded many factories on the basis of the original overseas factories, such as the expansion of Vietnam factory, the new second factory in Mexico, India base, etc.” Second, take root locally and improve the level of localized operation. “Taking Brazil as an example, we chose to establish a joint venture with local partner Semp to jointly build a production base, supply chain and R & D system. At present, TCL has become a well-known brand in Brazil.” Third, continue to increase R & D investment, layout and establish a global R & D system. “At present, 42 R & D centers have been set up in China, the United States, Poland and other places to pool global wisdom, grow their own strength and improve the R & D capacity of core technologies.”
So far this year, TCL has been established for more than 40 years. In these 40 years, TCL’s journey of globalization has taken 23 years. After being tempered in the international market, it has become one of the few independent brands in China that can really go to the world. In 2020, China Central Television launched a series of documentaries on big country brands. The first enterprise to appear was TCL. With the title of “road”, we will detail the internationalization process of TCL.
Li Dongsheng’s deep understanding of globalization is precisely the essence that he precipitated from TCL’s 23 years of fighting overseas markets.
In 1999, TCL established its first overseas production base in Vietnam and began to expand its overseas business with its own brand and self built factory, which is also the first step towards internationalization after it has established a firm foothold in China’s color TV market. China joined the WTO in 2001. In the following years, Chinese enterprises are full of ambition to catch up with the world, and all walks of life have the ambition to become a world-class enterprise.
Li Dongsheng has the same ambition. In 2004, TCL successively acquired the color TV business of Thomson and the mobile phone business of Alcatel. Unexpectedly, these two mergers and acquisitions not only brought huge losses to TCL, but also let TCL deeply understand the lessons brought by globalization. Several years later, looking back at the M & A at that time, Li Dongsheng said that TCL choked a mouthful of water, but therefore learned to swim.
After that “life and death disaster”, TCL came out of the trough from 2008 to 2009, and the development of globalization also entered a new growth stage.
According to Li Dongsheng, in 2021, TCL global handed over an answer sheet, and its overseas revenue is expected to exceed 110 billion yuan, with a year-on-year increase of more than 55%. Among them, TCL’s export sales reached 19.42 billion US dollars, an increase of 70% year-on-year. Most of its exported products are materials and core devices. “From the practice of TCL, the mode of deploying the industrial chain to the global market does not affect the export. After the cake becomes bigger, it will drive the export of core devices and materials.”
It is understood that TCL currently has 36 manufacturing bases around the world, covering more than 160 countries and regions. Li Dongsheng revealed that if the future conditions permit, TCL will not rule out the possibility of establishing some project factories in the United States according to the needs of business development. At the same time, TCL will actively consider increasing its industrial base in Africa and strengthening its business center in the Middle East.
gnawing down the “hard bone” of basic technology
As a “veteran” who has struggled in the manufacturing industry for 40 years, facing the complex situation faced by China’s manufacturing industry, Li Dongsheng also put forward a proposal to “support equity capital financing of high-tech manufacturing enterprises” this year. He said that the high-tech industry is an important starting point for China to break through the “neck” problem and establish the core competitiveness of the industry. High tech industries often have high capital and technology barriers. The central government has always encouraged and supported enterprises to use equity financing for financing, but in practice, there are still many restrictive conditions for enterprise equity capital financing, and the approval process is slow.
He suggested that the state relax some restrictions on equity capital financing of high-tech manufacturing enterprises.
Since he was elected to the National People’s Congress in 2003, Li Dongsheng has performed his duties for 20 consecutive years. In the past 20 years, he witnessed the historic leap of national development and the rise of China’s semiconductor display industry.
“I also have feelings and experiences on this 20-year time span. I want to share the view that there is no savior for industrial development, but only independent innovation.” On March 1, Li Dongsheng said in an interview.
20 years ago, China had zero sense of presence in the global semiconductor industry chain. Due to the weak industry, China also has the dilemma of “lack of core and less screen”. In 2009, South Korean enterprises swept away the 4 million stock sectors of Taiwan, China in the mainland market, so as to control the supply of the market. At the same time, the Korean enterprises also compressed the export of China’s LCD panels and began to sit at above 30%.
“All Chinese TV manufacturers have been firmly stuck by foreign countries in the link of color TV sets and paid a huge price.” Li Dongsheng recalled.
In 2009, TCL just recovered from the failed overseas M & A, and another problem was put in front of Li Dongsheng. How to solve the problem of “lack of core and less screen”? After months of insomnia and rounds of ideological games, Li Dongsheng decided to establish TCL Huaxing to overcome the problem of “less screen”. After his sober analysis, he believed that in the environment at that time, there was a chance to break through the “less screen” and there was no objective condition to break through the “lack of core”.
The risk of investing in TCL Huaxing is naturally huge. The investment in the first factory is as high as 24.5 billion yuan. Li Dongsheng also suffered great psychological pressure. Fortunately, he was right.
According to the data of Qunzhi consulting, TCL Huaxing ranked second in the global LCDTV panel shipment ranking in the first half of 2021. According to the statistics of cinnorresearch, in the first half of 2021, the LCD panel shipment area of BOE, TCL Huaxing and Huike accounted for 50.9% of the total global shipment area, accounting for more than half for the first time.
So far, TCL Huaxing has laid out 9 display panel production lines, 5 module factories, with an investment of more than 260 billion yuan. Its products cover large, medium and small-sized display panels, which has played an important role in solving the dilemma of “less screens” in China.
Tcl Technology Group Corporation(000100) 2021 performance forecast shows that the company’s semiconductor display business revenue increased by more than 80% year-on-year, and the net profit increased by more than 330% year-on-year.
“In 2021, China’s LCD panel shipments accounted for more than 60% of the world.” Li Dongsheng told the reporter of “daily economic news”. He also mentioned, “at present, we have come to the key node of attacking the upper reaches of the industrial chain again. We really need to overcome difficulties and gnaw down the ‘hard bone’ of basic technology.”
He said that in the field of LCD, China has accounted for 60% ~ 70% of the global production capacity, but in other new displays, China still has a gap in some fields. For example, in the field of OLED, Samsung now accounts for more than 50% of the global OLED market share. Therefore, for Chinese enterprises, it is necessary to consolidate the advantages of LCD business and establish new product technical capabilities on the innovation and breakthrough of some LCD business. At the same time, Chinese enterprises should strive to catch up with and surpass the next generation of new display technologies in the future.
Li Dongsheng told reporters that TCL is striving to make breakthroughs and catch up in printing OLED and quantum dot technology, and micro LED is also striving for opportunities and has actively arranged.
business strategy change is still very effective
In 2019, TCL was divided into Tcl Technology Group Corporation(000100) and TCL industries through asset restructuring. At present, Tcl Technology Group Corporation(000100) focuses on the fields of semiconductor display, semiconductor photovoltaic and semiconductor materials, and TCL industry focuses on intelligent terminal products and services.
A few days ago, Tcl Technology Group Corporation(000100) released the performance forecast for 2021, saying that the company achieved operating revenue of 161.6 billion yuan to 165 billion yuan last year, with a year-on-year increase of 111% ~ 115%; The net profit attributable to shareholders of listed companies was 10 billion yuan to 10.3 billion yuan, with a year-on-year increase of 128% ~ 135%.
On March 1, when asked what kind of core competitiveness an enterprise needs to have in order to live better and go further, Li Dongsheng explained that unlike enterprises, TCL’s core competitiveness can be summarized into four points: reform and innovation, overall view, globalization ability and perseverance.
“In the 40 years of development of TCL, change and innovation have always been the genes of enterprises. TCL has basically experienced more than 40 years of China’s reform and opening up. In this process, many new enterprises have grown up and many enterprises have been eliminated. There are many reasons for elimination. Of course, the most important reason is that they can’t adapt to change.” Li Dongsheng said.
He also said that enterprises must look far and see the development trend of the industry in the next three to five years. “TCL has long introduced the concept of enterprise strategic management. From the beginning of the three-year business strategy to the present five-year business strategy. Every year, we roll out the five-year strategy and five-year plan.”
Finally, he believes that there will be ups and downs in the development of enterprises. In times of adversity, whoever can persevere has a chance. “We were also greatly affected by the outbreak of the global epidemic in 2020. In the second quarter of 2020, we carefully analyzed the changes of the entire economic environment and summarized the challenges and opportunities we faced. At that time, we put forward the business strategy of ‘uphill refueling, catching up and surpassing’.”
In Li Dongsheng’s view, the difficulties caused by the epidemic are faced by the global industry. If there is an impact, there will be a reshuffle. When difficulties come, it is also an opportunity to surpass rivals. This is the reason why TCL puts forward the strategy of “uphill refueling”.
“The change of business strategy is still very effective. It is not easy for us to achieve a 21% growth in revenue in 2020. The growth in 2020 has laid the foundation for our growth in 2021. So looking back now, at that time, the tenacity of enterprises was very important. The brave win when they meet on a narrow road. This sentence also applies to enterprise competition.” Li Dongsheng concluded.
