China-based TCL Communication and Xiaomi reiterated that a strong internet-focused strategy as the way to survive and thrive in the fiercely competitive technology sector in the years ahead. The heads of both companies, now hoping to replicate their success in the mainland in the wider global market, were among the main speakers at the recently held APAC Innovation Summit last week in Hong Kong.
“We are exploring a refocusing strategy with us moving towards smart appliances and a TV-plus services model,” said TCL chairman and CEO Li Daosheng, admitting that the company’s growth rate is not at par with that of other internet and social media firms.
TCL’s revenue has increased from 28 billion yuan ($4.6 billion) to100 billion yuan ($16.3 billion) since its first aggressive move into foreign markets, when it acquired Alcatel’s handset business and Thomson’s TV unit in 2004. The company’s international business accounts for 28% of its total revenues and is a major driver of its growth.
Banking on the internet
“It is true that the market has changed. There is no growth in color TV as people spend less time watching TV. But there are other things that we can do, like bundling internet services plus TV. You can apply new services to the TV,” said Li.
He added that companies today are adopting the internet model in running a business as well as an internet way of thinking. “The internet is into each and every aspect of a traditional business today, including finance.”
He pointed out that behind the success of Chinese internet giants Alibaba, Baidu and Tencent are unsuccessful bids of many companies that have fallen by the wayside.
“It is a winner takes all situation. You may not like this statement, but it’s a very real one. These companies have controlling roles in these particular industries, and some people have lost the battles and have had very painful experiences. So it is logical that these companies can now provide a sustainable return for shareholders and are valued at a high rate,” he said.