TCL expanded overseas through acquisitions and mergers but later de-internationalized. From 2005-2006, TCL's sales dropped 9.33% while operating profit declined 503% due to losses in Europe. TCL merged with Thomson but the joint venture declared bankruptcy. TCL also acquired Schneider Electric but failed to integrate the businesses, facing issues with strategic decisions, human resources, and culture. This led TCL to reduce its stake in foreign ventures and pursue de-internationalization.
2. Foundation
The Creative Life
The First Pot of Gold
Audio Tape (60%
of the Domestic
Market Share)
Color TV Market
TOP 3 Brand
Initial Public Offering
(000100) in Shenzhen
Stock Exchange
Overseas Expansion
Merger Schneider in October
Alliance with Thomson
Failure of the Titan
*ST TCL
1981
1986 2002
20041993
TCL Group
3. Reach Agreement with Schneider
TCL set up a new
company ,TAMP,
along with Mobile
Giant Alcatel
Joint Venture with Alcatel
In 2004 January, TCL
merged its TV and DVD
Strategic Business Units
with Thomson Inc. as a
new firm, TCL--Thomson
Merged duplicate business
Extension of TCL’s operation overseas
In September of 2002,
TCL acquired insolvent
German company
Schneider Electric at
€ 8.2 million
4. 0
100
200
300
400
500
600
TCL’s performance between 2005 and 2006
2005
2006
19.32
Operating ProfitSales Revenue
Drop Down
From 2005 to 2006, the sales revenue
had dropped 9.33% while its
operating profit severely declined
503% with the main reason being
TCL multimedia had suffered great
loss from European Market.
Therefore, TCL’s earning per share is
-0.7471, the last six among all the
publicly listed company from
Shanghai and Shenzhen Stock
Exchange.
Severe Decline
Issues of Internationalization
516
468
97.19
5. l TCL-Thomson announced
bankruptcy liquidation procedures
request, in order to improve the
overall financial level of TCL
Reduction of Stake in a foreign venture
Decision of De-internalization
6. Causes of the
Deinternationalization
1. Fail to integrate businesses
2. Strategic Decisions-making error
3. Fail to integrate human resource
4. Fail to integrate culture difference
7. Fail to integrate businesses
Continued to use the brand of the
merged enterprises wrongly, this brand
strategy was not conducive to the
development of enterprises
Did not have enough market surveys,
failed to integrate the core technology,
the RCT was behind the times.
8. Strategic Decision-making error
Facing the fierce competition in
domestic market, TCL was in a
sluggish state and the profits was
reduced greatly, which forced it into
blind-expansion.
9. For sales department,
employees from Alcatel
were used to constant
compensations but TCL
paid them only base pay
plus sales commissions
leading to income
reduction.
Reduced
Compensation
package
Local nationals were
replaced and adjusted,
some managers were
demoted and even
replaced by PCNs from
TCL leading to mass
resignation.
Resignation of
Local Nationals
PCNs were short of
international experience
and local knowledge.
Some PCNs could not
even speak English and
communicate with local
colleagues.
Lack of
Experienced
PCNs
01 02 03
Fail to integrate human resource
10. TCL
Falling in Europe
TCL tried to carry out TCL`s own
rigid collectivistic corporate culture
which was not appropriate for a
individualistic corporate culture for
most European companies.
Ethnocentric approach
Fail to integrate culture difference
12. Avoiding undesirable de-internationalization
1. Focus on localization
and disperse
internationalization into
several steps.
3. Make long-term
investment in R&D to
exploit technology
comparative advantage
4. Address cultural
difference and human
resources carefully.
2.Draw up
comprehensive plans
and strategies.
