This year marks the 25th anniversary of TCL's voyage to sea. TCL founder and chairman Li Dongsheng returned to Vietnam, his first stop in the sea, after completing a two-month overseas trip.

On July 30, Li Dongsheng said in an interview with the media including The Paper News during the 25th Anniversary of TCL Globalization and the Vietnam Ecological Partner Conference,"There are two reasons for this year's overseas trip. One is that I want to visit the company for the 25th anniversary. The operation in the global market, and the other reason is frankly to seek opportunities in overseas markets under pressure."

Li Dongsheng, founder and chairman of TCL

Li Dongsheng said frankly that in the past two years, growth in some areas of the domestic market has slowed down, and companies have become increasingly involved. However, in overseas markets, Chinese companies have "recruited" companies from other countries."The skills we have learned from the competition are still quite powerful, so we have to go overseas to get more and get more for Chinese companies and Chinese manufacturing."

Vietnam is an important base for the global supply chain

In 2019, TCL chose Vietnam as its first stop at sea, acquired the then Hong Kong Luk's, and began operating in Vietnam. Today, TCL's business scale in Vietnam continues to expand. Currently, TCL Industrial, Kone, Maojia Technology, etc. have established manufacturing bases in Vietnam. Vietnam has become one of the important regional manufacturing and supply chain centers in TCL's global layout.

"The Vietnamese factory mainly has two functions. One covers the needs of the localized markets of Vietnam and ASEAN and produces products locally. The other is an important part of the global supply chain. The production capacity of the Vietnamese factory is second only to that of the Mexican factory. It is our second largest overseas production center. "Li Dongsheng said.

Today, Vietnam has become an important base for many Chinese companies to go overseas. A relatively complete display industry chain ecosystem has been built around Ho Chi Minh City. Not only Samsung and TCL have been deployed, but other domestic display companies have also been attracted to settle in, further enriching the display ecosystem in southern Vietnam.

In recent years, globalization has faced some headwinds, and the layout of supply chains has become regionalized and localized. Against these background factors, Vietnam has become one of the important choices for the layout of large global companies.

Li Dongsheng said that in the past 25 years, TCL has gradually formed a relatively complete global supply chain system and several regional business centers. For example, TCL currently has overseas business centers such as Asia Pacific, North America, Latin America, Middle East and Africa, and Europe. These business centers have the task of establishing and improving industrial chains in the region.

In terms of local production, TCL's overseas manufacturing bases are currently located in seven countries including Vietnam, Indonesia, India, Pakistan, Poland, Mexico, and Brazil, achieving localized manufacturing layout in major regions such as Southeast Asia, South Asia, Europe, North America, and South America.

Workers at TCL's Binyang factory in Vietnam are working

TCL Smart Electrical (Vietnam) Co., Ltd.(referred to as Binh Duong Factory) invested and built by TCL in 2019 is located in Binh Duong Province, Vietnam, about 50 kilometers away from Ho Chi Minh City. This factory is an important production base for TCL's global color TV sets, with an annual production capacity of more than 7 million TV sets, and most of its products are sold to the U.S. market.

The Paper reporter saw at the scene that TCL Pingyang factory includes full-process production bases such as core processing, injection molding, module complete equipment, and back plate processing. It is a very modern color TV production factory.

Xu Linjun, general manager of the Vietnam base of TCL Industrial Pan-Smart Screen BU Manufacturing Center, said that TCL's global factories adopt unified standards to require and manage them. Vietnam has many young people and is easy to recruit. In addition, the wages and benefits provided by the company are high, and the labor loss rate is very low. He expects revenue from the Pingyang factory to exceed US$1 billion this year.

Go to overseas markets to "roll"

The slowdown in domestic market demand in recent years, coupled with the headwinds of globalization, has made it more difficult and challenging for Chinese companies to go abroad in a new round. Li Dongsheng previously said that globalization is a must-answer question for Chinese companies. If they don't go to sea, they will be eliminated. They must move from exporting products to exporting industrial capabilities, which will not only further enhance the core competitiveness of enterprises in the world, but also drive domestic exports.

After two months of overseas inspections, Li Dongsheng emphasized when talking about globalization: "For TCL, there will be no change in the basic globalization strategy. This is what we have always adhered to, from exporting products to jointly building industrial capabilities with the local area. In the future, the global layout overseas will follow industrial transformation and upgrading, increasing the depth and breadth of the overseas industrial layout."

Li Dongsheng mentioned that TCL Zhonghuan has just announced that it has signed an investment project agreement with Saudi Arabia and is preparing to build a 20GW photovoltaic crystal wafer factory in Saudi Arabia. "This project is a huge investment. Doing it locally and with partners, Saudi Arabia's national sovereign fund PIF is the main shareholder. In the future, we will not only go to sea for consumer products and terminal products, but also our industrial products, To B's products, will also increase."

"Next, the transformation and upgrading of the industry will also be realized overseas. Maybe in the future, we will continue to deploy relevant high-tech basic industries and products in major overseas national markets. The layout of high-tech and heavy assets must also be driven by market opportunities." Li Dongsheng emphasized that it is very difficult and risky to invest entirely in asset-heavy projects such as the Saudi Arabian project in the Middle East. If the local area wants to develop this industry, it means that he is willing to take money, which will greatly increase the probability of success of the project.

The sound global industrial layout promotes TCL's overseas revenue to achieve continued growth. In the past five years, TCL's overseas revenue has increased from 59 billion yuan to 125.3 billion yuan, with an average annual growth rate of 17.6%. In 2023, TCL's overseas product revenue accounted for nearly half of total product revenue, and TCL TV sales reached 25.26 million units, ranking second in the world. At the same time, TCL also contributes to the local economic and social development by promoting overseas localized operations.

Talking about the globalization process of the past 25 years, Li Dongsheng believes that there are three important nodes. The first one was the battle in Vietnam. At that time, it was a question of "dare to fight". At that time, the company was living quite well in the domestic market and chose Vietnam as a pilot for the company's globalization."This battle was very difficult, so we lost a lot of money in the first 18 months, but we were thinking about whether to withdraw it? But we gritted our teeth and persisted."

The second node was cross-border mergers and acquisitions in 2004 (color TV acquired Thomson of France, mobile phone acquired Alcatel). Li Dongsheng believes that this cross-border M & A has made a big leap. It has transformed TCL's business from China's business into a true global business and extended it to economically developed countries such as Europe and the United States. This challenge has been very difficult.

Now we are facing the third node of globalization, that is, how to deal with frequent trade and tariff barriers? For example,"After the United States increases taxes, we will have to adjust the industrial chain exporting to the United States, otherwise we will give up this market." At that time, the adjustment of the U.S. industrial chain once put a lot of pressure on us, because the United States is still our largest single national market." Li Dongsheng said.

Li Dongsheng also gave a specific explanation of TCL's restructured globalization strategy: "The first is to improve the global industrial layout, changing from exporting products to jointly building industrial capabilities with the local area; the second is to coordinate the upstream and downstream of the industrial chain to jointly build a global industrial ecology; The third is to enhance global operation capabilities and build a diversified, integrated and inclusive cultural and global management system."