TCL is a manufacturer of electronic products, primarily televisions and TV components, in the PRC. The parent company is TCL Holdings Corp Ltd which is backed by the Huizhou municipal government. TCL listed on 26 November, 1999 with 600 million shares on offer to the public at HK$1.75 each. 2.4 billion shares are outstanding subsequent to the IPO which gave the company an initial capitalization of HK$4.2 billion. The major shareholder is T.C.L. Industries Holdings (H.K.) Ltd. which holds 51.15%.
In August 1999, the company signed a co-operation agreement with Microsoft China to develop products which use the Windows CE operating system.
Current
85% of the company's profit is generated from the manufacture and sale of television sets. It also produces other audio-visual products and white goods including refrigerators and washing machines.
Year
Profit
1997
$204 million
1998
$324 million
1999 projections
>$500 million
5 months to 31 May 1999
$230 million
TCL expects strong profit growth from its information technology products including cable set-top-boxes, cable modems, and routers. Though the contributions of these IT products account for only 10% of revenue this year, management expects they will account for 20 to 30 percent of turnover within the next two to three years.
The parent company, TCL Holdings, plans to inject a sales network into TCL International by May 2000. The network has a sales force of 8,000 in China with 33 sales offices and 551 service centers across the country giving it an estimated net asset value between $70 and $100 million. The management has a 49% stake in this network.
Future
There are many TV manufacturers in the PRC including Luks Industrial (366), Starlight International (485), Nanjing Panda (553), Great Wall Electronics (689), and Leading Spirit Electric (1197). Most of them are unattractive. Also, the technology required for their internet-related products is not particularly high, and there should be fierce competition in this market.