TCL plans to launch its own brand and build factory in Brazil

Four years after beginning to study the expansion of its operations in the Brazilian market, Chinese electronics maker TCL will put its strategy into practice. By year-end, the company will start selling locally manufactured products with its own brand. "We want to not only reach, but being leaders of the local market", Kevin Wang, vice president of TCL Multimedia and the executive in charge of the company’s business outside China, told Valor.

The executive said the company’s goal is to explore the segment of more expensive TV sets, with technologies such as Internet connection (smart TVs) and curved screens. This segment is dominated in Brazil by Samsung, LG and Sony — the same brands TCL competes with globally. By focusing on more expensive products, the company wants to get away from the consumers’ perception with regard to Chinese manufacturers: cheap products of low quality. "This happened ten years ago, when Chinese companies had only the price to compete. Today we have a lot of technology,” Mr. Wang said.

Brazil is not exactly new to TCL. The company already operates in the country with its mobile phone brand Alcatel One Touch (which has nothing to do with French group Alcatel, bought by Finland’s Nokia) and has agreements with local manufacturers such as Britania, owner of Philco. In this case, companies buy the TCL products but sell them under their own brands.

The investment in Brazil is not expected to create problems in the relationship with these partners, because TCL will act in a different market segment. "If I were selling in the same range, it would be a competition. But that’s not what will happen. In addition, the more the TCL knows the market, the more I can help them grow,” he said.

TCL is currently in talks with partners to manufacture its products locally, as well as with retailers. The agreements need to be completed until August so products have enough time to reach the retail market in time for the holiday season. Yue Haiping, general manager for the TCL operation in Brazil, said the focus is on retailers specialized in more expensive products, such as Fnac and Fast Shop. “We don’t want to sell 1 million units right away. We want to make a long-term strategy, with a five-ten year long vision,” he said.

During this period, the company plans to set up its own factory in the country. "To grow and have competitiveness, one needs to control the supply chain, which has many ends," the executive said, adding TCL does not rule out acquisitions in Brazil to accelerate the expansion process. "We are evaluating some opportunities," he said without elaborating.

In addition to TVs, TCL may also start selling in Brazil by year-end air conditioners under its own brand. But Mr. Wang said this is more likely to occur in 2016.

In 2014, TCL had $16 billion in revenue worldwide, up 16.5% from 2013. Net income advanced 47%, to $690 million. The company began its international expansion ten years ago and today sales outside China account for 48% of the total. In TVs, the percentage is closer to 50% and is expected to grow even more this year, Mr. Wang said. 

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