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Decoding the reasons for the high growth of TCL TV 2019 in the first quarter

TCL Colour TV

Welcome again to the new beginning

In the first quarter of 2019, TCL Electronic Holdings Limited (hereinafter referred to as TCL) released sales figures for TV sets , showing a significant increase of 32.5% to 8.443 million units in the first quarter, a single-season record high. Among them, television sales in overseas markets rose 50.9% to 5.95 million units a year earlier, accounting for more than 70% of total sales.

In the context of the overall flat background of the colour TV industry, TCL is undoubtedly the industry’s strength. In fact, it is not uncommon for TCL to achieve such results.

In 2018, TCL’s global sales of colour TVs ranked second, and the domestic and international markets were fully blossoming. Therefore, there was a good sales inertia in the first quarter of this year. Behind TCL’s high growth in the first quarter, there are three reasons: structural adjustments have seen initial results, brands have entered the dividend period, and globalization has entered a rapid growth track.

Structural adjustment bonus

TCL’s first-quarter results report showed that the overall sales of LCD TVs maintained a high growth rate. The sales volume of smart TVs and 4K TVs were 6.839 million units and 3.323 million units, respectively, showing a significant increase of 47.4% and 82.8% respectively.

One of the important reasons for exploring the high growth behind TCL’s first quarter was a structural adjustment. This structural adjustment includes product structure and channel structure.

Look at the product structure first. In terms of product structure optimization, TCL continued to increase the proportion of sales of mid-to-high-end products. The proportion of sales of smart TVs increased from 77.6% in 2017 to 84.4% in 2018; the proportion of 4K TV sales increased from 26.4% in 2017. 39.6% by 2018; sales of LCD TVs of 55” and above increased from 20.6% in 2017 to 25.2% in 2018; the average sales measure of the LCD TV was increased from 39.8 inches in 2017 to 42.2 inches in 2018.

From the data of the first quarter, the proportion of 4K TV sales is still increasing, with sales of 6.839 million units. This shows that TCL’s advantages are becoming more and more obvious in 4K high-end TVs. The first quarter is just a primer, and it is very likely that 4K TV will become the leader in sales in 2019.

Look at the channel structure. In the domestic market, in China, TCL has opened up online and offline channels. In addition to good cooperation with e-commerce giants such as Ali Suning Jingdong, it has successfully activated offline physical channels through various marketing activities.

In the international market, the globalization of TCL in recent years has been more radical. In Europe, Asia, Africa and other regions, they have entered the mainstream online and offline channels, which is the main reason for promoting the rapid expansion of TCL’s overseas market.

In addition to channels, TCL has manufacturing bases in Mexico, Poland, Vietnam, Brazil, and Argentina, which is self-evident for TCL’s access to global channels and global radiation.

Affected by this, in the Chinese market, TCL’s LCD TV sales volume in the first quarter was 2.493 million units, a steady increase of 2.6% year-on-year; the self-owned brand achieved an annual growth rate of 8.3%. Among them, sales of smart TVs accounted for 82.4% of LCD TV sales in the first quarter (excluding ODM business), and 4K TV sales accounted for 55.2% of LCD TV sales in the first quarter (excluding ODM business).

Brand enters the bonus period

In recent years, TCL brand awareness and referral rates have increased significantly.

TCL’s first value marketing strategy from China to the world, which not only highlights the Chinese elements but also closely integrates TCL’s brand connotation with Chinese culture, is a classic case of China’s home appliance manufacturing industry. The accumulation and recognition of a brand must be based on cultural identity. The value marketing proposed by TCL is based on respect for local consumer culture, physical needs and emotional needs.

This approach respects localization and cleverly bridges the cultural communication of consumers around the world. For example, in the 2018 World Cup, TCL skillfully integrated World Cup marketing and branding, and a global sports marketing boom in the world has greatly benefited TCL’s global sales. Whether TCL last year’s global sales second or the first quarter of this year’s record is good, it should be said that the power of the brand is an important driver of sales.

In fact, the brand is the embodiment of soft power and cannot be reflected by quantitative indicators. For example, it is different from sales, and the brand is an intangible asset. But it can be proved that if there is no brand premium, no brand recognition and no mention rate, TCL’s global sales will not increase rapidly.

The two promote each other and feed each other. This is the best evidence for the TCL brand to enter the dividend period, and it is also a good tool to support its performance.

One measure of brand value is the size of the user. In the first quarter of this year, the number of new users activated through Huanwang was 2.91 million, up 41.9% year-on-year; the cumulative total number of users climbed to 34.818 million, up 36.1% year-on-year; the number of active users per day jumped to 17.118 million, a year-on-year Increased by 42.0%.

TCL TV
(BlueTechnology)

Global dividend

It is worth noting that TCL’s annual report in the first quarter of this year, the overseas market performance is eye-catching.

In the overseas market, the company’s global strategy in the first quarter has yielded fruitful results. LCD TV sales increased by 50.9% year-on-year to 5.95 million units, accounting for over 70% of total sales. All regions achieved rapid growth year-on-year.

Among them, the North American market continued strong growth momentum, sales surged 112% year-on-year; according to NPD’s latest market research report data, TCL TV in the first quarter of the North American sales market ranked sixth in the sixth consecutive week, once climbed to the first.

The European market grew by 27.1% year-on-year, with Germany, Italy and France growing significantly. Emerging markets grew by 39.9% year-on-year, with markets such as Argentina, Ecuador, Indonesia and Australia being fast-growing regions.

Through product structure adjustments and brand dividend periods, TCL’s globalization is entering its best stage in history.

On the one hand, TCL’s brand marketing and product quality are spreading to breadth and depth, and consumers’ experience of TCL has received rave reviews;

On the other hand, channel construction and localized manufacturing acceleration have become the boosters of TCL globalization.

[Blue Technology] Ji Feng

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