No one can stay out on the road of building a powerful country through science and technology.
On March 28, Li Dongsheng, the founder and chairman of TCL, received an exclusive interview with Huijian column of 21st Century Business Herald at Tcl Technology Group Corporation(000100) building in Huizhou, Guangdong Province. tells the thrilling business story of ups and downs and great gains and losses of TCL in the past 40 years
Electronic watch, mobile phone, TV, computer, tablet and other screens are full of people’s lives, which is what has happened in recent decades. As the entrance of “living room economy”, TV screen has become a battleground for strategists. From hardware manufacturers of terminals, traditional content providers of TV stations to Internet companies that want both software and hardware, they all hope to turn TV screen into a complete commercial closed loop cross border competition, industrial chain competition and ecological competition are in full swing on this screen
TCL, which ranks second in the world in terms of color TV shipments, took the initiative to open a forward-looking layout extending to the semiconductor display industry more than a decade ago. Semiconductor industry is not only the foundation of today’s high-tech industry, but also a strategic, basic and leading industry to support and protect national security. The scale of the global semiconductor market is developing continuously in the cyclical fluctuation. With the transfer of industry to the Asia Pacific region, Chinese mainland will face a huge opportunity of localization.
The unique “panel cycle” is the alternation of profit and loss, and the product application is becoming more and more widely. Enterprises must first bear the losses in the cycle and continue to invest in the construction of a new generation of production lines in order to jump up and usher in greater output and profits. In the evolution history of semiconductor display industry, American companies first invented the liquid crystal display model in 1968, but failed to adhere to it. It shows that the Japanese have defeated the “Sino Korean semiconductor industry” in the whole anti Korean investment cycle, and then TCL has become the “Sino Korean semiconductor industry” led by the United States
The world is always developing. Such changes always give people hope and expectation. It is precisely because they cannot maintain their advantages forever. Fortunately, the latecomers may surpass the forerunners through efforts.
“the development of terminal products must surpass television”
“If you dare not fight this battle, you have no chance of winning at all.”—— Dong Sheng Li
Huijian: when it comes to TCL, you will first think of TV, but in fact Tcl Technology Group Corporation(000100) is already focused on semiconductor display, semiconductor photovoltaic and semiconductor material industries. Drucker said that any enterprise that wants to change must give up yesterday. How can TCL not indulge in yesterday’s success?
Li Dongsheng: there is a word called tuyere. Enterprises can seize different opportunities at different stages of national economic development. When TCL was founded 40 years ago, it was a shortage economy. The first goal of our generation was to buy three major items: TV, refrigerator and washing machine. If not, it may be difficult to get a wife. At that time, the market demand was consumer electronics, and TCL started with consumer electronics.
With the national economic development, industrial transformation and upgrading, and the extension of manufacturing industry to high-end, if consumer electronic products rely more on application technology innovation, extreme cost efficiency and brand marketing, to the current high-tech, asset heavy and long-term high-tech industries, such as TCL Huaxing as semiconductor display and Zhonghuan semiconductor as semiconductor photovoltaic and semiconductor materials, there are new requirements for the competitiveness of enterprises, More depends on the promotion of basic technological innovation. Basic technology plus applied technology should be continuously invested. These tracks have broader prospects. If the enterprise stays in the original track forever, your ceiling will arrive soon.
Huijian: not only the ceiling, but also a word called dimension reduction strike. Our TV has not been turned on for two years. Only when we receive the SMS of deducting cable TV fee will we think of having TV at home. When the generation of children who grow up with pad, mobile phone and projector grow up, how will the TV terminal business go?
Li Dongsheng: this is really a big problem. The sales of TV sets in the Chinese market have begun to decline, but there are still some new opportunities in the future. For example, expand from TV to various intelligent display terminals, including business display screen, education screen, conference screen and other display products, and expand to more application scenarios. Secondly, from China to overseas, the global demand for TV sets is still rising, especially in some emerging market countries. TV is still the consumer electronic product most valued by consumers. Now two-thirds of our TV sets are sold overseas.
But your question is very good. For us, we must surpass TV in intelligent terminal products. If we still stay in the category of TV, it is difficult to make greater development. Terminal products need to open up many new opportunities and go up around the industrial chain, so we do display screen, one is to support the development of terminal business, and the other is to develop wider applications.
Huijian: the local household electrical appliance leaders who are deeply constrained by the lack of core and screen dream of extending to the upstream display panel industry, but among many manufacturers, only TCL has done so. In 2009, the company just turned losses into profits. Before that, it took three years to fill the hole in the acquisition of Alcatel mobile phones and Thomson color TV sets in France. Why did it have the confidence to enter the field of display panel, which is recognized as the most money burning field, and become Ma Huaxing?
Li Dongsheng: it was really tangled to make decisions at that time, because the investment and construction and return cycle of this industry was very long, which was a great test for the enterprise. I made this decision based on several considerations. First, industrial development. Only when it is linked from the terminal to the upstream can it be competitive. I see that in the decade before 2010, Korean TV sets quickly surpassed Japanese brands, and Samsung and LG surpassed Panasonic and Toshiba in Japan. A very important reason is that both Samsung and LG have display screens, so I think China’s color TV industry should follow the same path, and the lack of core and screen has always been an important factor restricting the development of China’s color TV industry. I chose this display screen industry.
But making strategic choices is one thing. Making up your mind to do it and really investing in it is another. In 2007, we became a LCD module factory, accumulated the technical ability of LCD and began to form a team. When it was decided to enter panel manufacturing in 2009, there was a certain accumulation. The most important thing is to make up your mind. If you dare to make this determination, you will have the opportunity to solve the problems one by one. If you dare not fight this battle, you have no chance of winning at all.
Huijian: since 2009, the company has bucked the trend for more than ten years and continued to invest heavily in the display screen, becoming one of the “two heroes of display panel” in China. From completely relying on imports to becoming the world’s largest shipping place of LCD panels, China is certainly inseparable from the huge demand support of China’s consumer electronics industry, and the opportunity for the strategic transfer of Japan and South Korea’s panel industry is inseparable from your brave decision-making. Now why enter the field of it panel and try to expand the semiconductor track?
Li Dongsheng: as for the color TV question you just asked me, the global growth of color TV is almost to the ceiling, but it shows that there is still a lot of room for product growth, about 10% a year. The new growth comes from various new needs such as it panel and commercial display.
Therefore, we built T9 factory last year, which is oriented to it and commercial display products. It is a fast-growing new application. Last year, a new low-temperature polysilicon factory T5 was built, which is especially suitable for on-board products. New energy vehicles and electric vehicles grow very fast, driving the rapid development of on-board display. We should constantly develop new businesses according to the changes of market and consumer demand to support sustainable growth.
Huijian: speaking of so many newly invested factories and the huge investment in Huaxing before, the company’s capital cost has always maintained a low level in the industry. What are your experiences in financial management and cash flow?
Li Dongsheng: this is a painful lesson. The operating efficiency of cross-border M & A in 2004 was not good. For some time, especially in 2005 and 2006, the cash flow was very tight. In order to tide over the difficulties, the company was forced to shrink its business to ensure the continuous loss of cash flow. I personally realized that cash flow is the blood of an enterprise. Later, the management of operating cash flow should be given the first priority. Any project decision-making and business planning should be measured by operating cash flow model, leaving some room.
Huijian: what made you decide to split the two business segments of intelligent terminal and semiconductor display by the end of 2018? Has the effect achieved the expectation?
Li Dongsheng: in 2014, the group’s revenue reached 100 billion, and then hovered around 100 billion in the next five years. In 2015, I saw the company’s competitiveness decline and efficiency decline. How to break through the bottleneck is the goal of reform and transformation in 2017, one of which is asset restructuring. At that time, TCL could be divided into two parts: terminal product business and semiconductor display business. The two business management logics were completely different. Terminal business is a variety of consumer electronic products, which is driven by product technological innovation, ultimate cost efficiency and brand market. Semiconductor display is a high-tech, heavy asset and long-term business. It depends on basic technology and application technology. It also needs huge investment and management ability across the industrial development cycle. The benefit cycle of a project from investment to completion is nearly 5 years. The management ability required by long-term business is different from that of the current business. It is not easy to manage the two businesses in one entity. This judgment comes from many lessons and setbacks.
After the split, the effect is very good. The terminal products focus on expanding new business applications and opening up greater growth space through globalization. However, Tcl Technology Group Corporation(000100) group chose the opportunity to acquire semiconductor materials and photovoltaic new energy business in 2019, and layout semiconductor chip business and integrated circuit design business, which are in line with the direction of national industrial transformation and upgrading. It is also a project to break through the neck technology node, creating more space for the enterprise in the future. After the split, both sectors have developed rapidly. The group has resumed growth since 2019. Its revenue exceeded 200 billion in 2021 and its goal this year is to exceed 300 billion.
“China’s GNP will grow faster”
“Now I feel a lot of pressure, but it also makes us more determined that we must wade out of this road (scientific and technological manufacturing) by ourselves. We can’t stay out of it and be controlled by others.”—— Dong Sheng Li
Huijian: will the rise of anti globalization trend after the epidemic affect the company’s globalization and going out layout?
Li Dongsheng: has a great impact on us. TCL has a high degree of globalization. Last year, nearly 50% of our sales of more than 200 billion were realized overseas. Last year, our overseas business and export business continued to grow rapidly because of the good management of the epidemic in China and the low output of overseas supply chains. This year’s pressure is greater. After the Spring Festival, overseas business teams will go to their country to promote the development of local business. TCL has explored a localization mode in its global operation over the past decade, placing the industrial chain locally, building factories locally, cultivating supply chains, and doing product design, manufacturing, sales and service.
This model has effectively avoided trade protectionism, and tax increases have no impact on us. Now all countries, especially developing countries, want to develop their own economy and more manufacturing in their own countries. This model has also been welcomed by the local government. In the future, it will continue to be distributed globally in this mode, which is also an important direction of China’s manufacturing industry in the future.
China’s manufacturing capacity is the largest in the world. At present, our industrial output accounts for nearly 30% of the world. China’s huge industrial capacity can not be absorbed by the Chinese market alone. It needs to be imported into the global market. In addition, the previous model was to sell products to various countries. In the future, more products will be exported to major global markets instead of industrial capacity. GNP is the total output of a country in the world, including the output of the country’s overseas enterprises. In the past, there was little difference between China’s GNP and GDP. I believe China’s GNP will grow faster in the future.
Huijian: is the company likely to die or be swallowed up today? If so, why; If we can become the world’s leading technology group, what will be the key to win?
Li Dongsheng : No enterprise can live forever. Globally, many large multinational enterprises, such as general motors and Ford, used to be Big Macs, but today they are surpassed by new forces such as Tesla. In the past 40 years of reform and opening up, many Chinese enterprises have been eliminated, so enterprises must have a strong sense of crisis. Bill Gates, the founder of Microsoft, once said that my enterprise is only 18 months away from bankruptcy, so enterprises should constantly update their competitiveness, build new capabilities in development and develop new businesses. I often remind myself that we should take a long-term view, win without pride and lose without discouragement.
Huijian: what are the biggest wins and losses of TCL in the past 40 years?
Li Dongsheng: the biggest setback is cross-border M & A. the enterprise is almost unable to step past, which is my darkest moment. What do you say is the greatest success? I believe it will always be the next success.
Huijian: Amazon’s founder Bezos said that many people will ask him what the changes in the industry will be in the next 10 years, but few will ask him what will remain unchanged in the next 10 years. He thinks the second question is more important than the first one, because any enterprise should base its strategy on the unchanged things rather than the changed things. What do you think is the difference between the change and the invariance in your industry in the next 10 years?
Li Dongsheng: what remains unchanged is to be based on scientific and technological manufacturing. The only thing that remains unchanged is continuous change. Innovation remains unchanged for TCL. It will not change to focus on China’s manufacturing industry.
Huijian: for enterprises, what really matters may not be what the trend is, but the change of the trend. The problem is that change is unpredictable. Can you give an example of how you perceived the trend change and seized the opportunity in the past?
Li Dongsheng: China’s accession to the WTO in 2001 meant that the industries and markets of China and foreign countries should be opened to the outside world. At that time, TCL’s consumer electronics field was completely open in a very short time. If it only followed the Chinese market to compete with the world, it would be difficult to win this battle. So we should open up markets overseas. Since then, we have started and gradually deepened the strategy of global operation, and successively entered the markets of developing countries and Europe and the United States. Another example is the drastic changes in the global consumer electronics industry around 2010. In line with the general trend of national manufacturing transformation and upgrading, it took all its assets to establish TCL Huaxing and advance upstream of the industrial chain.
Facts have proved that this direction is correct.
Huijian: what is the biggest difficulty in the development of China’s manufacturing industry?
Li Dongsheng: the biggest bottleneck in the development of China’s manufacturing industry is technology. In recent years, it has become a global leader in many industries, but many fields are still controlled by others. In the past, these problems had little impact under the normal pattern of economic globalization, but the suppression of China by western countries in recent years has the greatest impact on us is the technical blockade. We can design integrated circuits, but we can’t do it if we don’t sell high-end equipment to us abroad. Now we can’t make many chips and fine chemical materials. The other party will restrict the supply of these materials to China and crack down on some industries.
China’s science and technology manufacturing industry still has a long way to go to reach the world’s first echelon in most fields. Due to the Western blockade on us, this road will be more difficult and take longer. Now I feel a lot of pressure, but it also makes us more determined. We must wade out of this road by ourselves, and we can’t stay out of it and be controlled by others.
Huijian: what is TCL’s biggest inspiration for China’s manufacturing industry?
Li Dongsheng: how can an enterprise keep pace with the times, adapt to the different requirements for enterprise competitiveness in different stages of China’s economic development, and maintain vitality, competitiveness and sustainable development through continuous reform and innovation? I think this is the most valuable reference TCL can give Chinese enterprises and entrepreneurs.
Huijian: on the occasion of the 40th anniversary of the company’s founding last year, it published “all things live”. What do you want to tell the world through this book?
Li Dongsheng: two aspects: one is to summarize the company’s 40 years of development. TCL has experienced the whole process of China’s 40 years of reform and opening up. Sharing with other enterprises will be of reference and help to you. In addition, it is an account of the team. Over the past 40 years, look back and see what has been done right, what has not been done right, what has been achieved, what has not been achieved, and what to do in the future.
Huijian: what is the next focus of the company?
Li Dongsheng: for TCL, it will continue to cultivate in high-tech, heavy asset and long-term technology manufacturing industry in the next 10 years, and focus on Pan semiconductor industry in the next 5 years, including semiconductor display, photovoltaic new energy, semiconductor materials, chips, integrated circuit design, etc. An enterprise has limited resources. Business focus and resource concentration are the basic conditions for success.
China has certain advantages in photovoltaic new energy industry. In terms of semiconductor display, such as liquid crystal, China is relatively leading in the world, but semiconductor materials, including integrated circuits and silicon wafers, still need to catch up. At present, China produces integrated circuits and nearly 90% of silicon chips need to be imported. There is still a long way to go in the future.
Huijian: how long do you expect to walk?
Li Dongsheng: I believe we should be able to catch up with the world’s leading level in integrated circuit silicon chip in five years, but in integrated circuit and chip technology, this time is really hard to say. Ten or eight years is a must.
Huijian: is this an optimistic or conservative estimate?
Li Dongsheng: should be relatively neutral.
enterprises need “altruism” to achieve long-term development
“If you only calculate your own account, it is difficult for suppliers to cooperate for a long time. Price is part of the cooperation, but it is far from all. Through the improvement of supply chain and efficiency, the cooperation can also bring value.”—— Dong Sheng Li
Huijian: excellent entrepreneurs always grow up in various contradictions and conflicts, efficiency and innovation, system and personalization, profit and social responsibility, authorization and control, self and others, etc. What is the most serious conflict you have ever dealt with?
Li Dongsheng: if you have a clear strategic goal and business logic, it is not difficult to make a choice, but the persistence after the choice. You can’t see the effect immediately when you do something. The darkness before dawn is the hardest. The international mergers and acquisitions and the trough of Huaxing Industry made me realize that it is not easy to adhere to it, but after surviving, my business and ability will be greatly improved, and my courage and courage will also increase.
Huijian: if you had a chance to go back, which year would you choose to go back? Why?
Li Dongsheng: if I can go back to the past, I hope to do cross-border M & A again. We will pay less if we make more preparations and make fewer mistakes. Making this case a successful case of Chinese enterprise globalization will be more meaningful to the company’s own development and the globalization of other Chinese enterprises.
Huijian: what is the progress of the acquisition of Samsung Suzhou factory compared with the French acquisition?
Li Dongsheng: can’t be compared. We just bought a factory of Samsung and managed it very well, so the acquisition is also two-way. After we went in, we found that Samsung has many places worth learning in enterprise management. Of course, we also have many places they can learn from and learn from the strengths of both sides, which has significantly improved the operating performance of the whole factory.
Huijian: if you were asked to score your life test paper, how many points would you score?
Li Dongsheng: I gave 70 points.
Huijian: where are the main points deducted?
Li Dongsheng: first, it’s a pity that I didn’t have enough educational background when I was young. I went to college at grade 77 and didn’t study as a graduate student after finishing my undergraduate course, and I didn’t have the opportunity to go abroad. The pattern and vision are still very limited when the enterprise achieves a certain scale. I’m still studying and making up lessons today. Recently, I’m still doing my doctoral thesis in Tsinghua University.
In addition, in the process of operation, we also made many wrong decisions. If we make so many mistakes, we can’t score too high. Let’s leave this to others to judge. Successful things exist whether you say it or not. The key is to find out what things are wrong. Don’t make the same mistakes again in the future. If you repeat and summarize like this every time, your ability will continue to improve.
Hui: do you make the same mistake again?
Li Dongsheng: the same mistake will not fall twice, but the same kind may still fall. For example, the pattern of the industry has always felt that it is not high enough and far enough.
Huijian: can you talk about family life and the time when you don’t work?
Li Dongsheng: my life is relatively simple. I like reading books and watching plays outside of work. In addition, I like sports, especially outdoor sports, such as swimming. I’ve been working out recently, hoping to keep in a better state. My wife is mainly in charge of the family, and she is also in charge of children’s education. Both of them are in charge. It’s easy to argue, so I’ll leave it to her. I don’t have time.
Huijian: what is the meaning of your life?
Li Dongsheng: I hung a banner when I went to the countryside at an educated youth farm in Huizhou, “if you reach the goal, you will help the world, if you are poor, you will be alone”. This traditional Chinese Confucian cultural concept has a great impact on me. Making life more valuable to society is the basis of my values.
Wealth is very important. It can create a better life for yourself and your family, but wealth is not all. Entrepreneurs must pursue beyond wealth, have greater goals, and have “altruistic” thinking.
Huijian: can you give me an example of “altruistic” thinking?
Li Dongsheng: altruistic thinking is very simple in enterprise development. We must make industrial chain and supply chain partners willing to cooperate with you for a long time. For example, when we build Huaxing, we should choose an electronic glass supplier and Japanese Asahi nitko among the three leading enterprises in the world. Then when making any business decision, we should not only consider ourselves, but also consider each other. Today, the two enterprises have maintained good cooperation, which has also played a great role in improving our industrial competitiveness.
Huijian: but you just mentioned that a very important profit point of terminal products is the ultimate cost reduction and efficiency improvement, which will compress the profit space of suppliers. At this time, how can the “altruistic” thinking be reflected?
Li Dongsheng: transaction price is determined by the market. “Altruistic” thinking means that we must focus on the long term in cooperation. You can’t only consider yourself. If you only calculate your own account, it will be difficult for suppliers to cooperate for a long time. Price is a part of cooperation, but it is far from complete. In cooperation, value can also be brought through the improvement of supply chain and efficiency.
