Chinese mobile phone-maker TCL Communication Technology Holdings aims to nearly double revenue by 2010 on robust emerging market demand, but warned of intensifying competition as the firm emerges from a three-year overhaul.
The cellphone-manufacturing arm of electronics and appliances giant TCL Corp - which acquired the troubled handset business of French telecoms equipment maker Alcatel - plans to sell 16 million handsets this year against 12.5 million in 2007.
Chief Executive Liu Fei told Reuters on August 29 he was confident of growth despite intensified competition from China's top two telecoms equipment makers, Huawei Technologies and ZTE Corp globally. And TCL is also hoping to go up against the likes of global leaders Nokia and LG Electronics.
"2005-2007 for me is the turnaround and recovery. Starting 2008, I want to grow the company at 25 percent a year in both revenue and unit sales, for three years," Liu said in an interview. The company aims to have 5 percent of the global handset market share over the next few years from 1.2 percent in 2007, he said.
"We see clear competition. But we should be able to compete with foreign players as we are more cost-efficient and able to compete with Chinese players, and they (Huawei and ZTE) are pure ODMs (original design manufacturers), while we are a brand." Unit shipments jumped 60 percent to 6.7 million in January-June, 90 percent of which went abroad - an unusual amount of foreign business for a Chinese firm.
Liu said first-half unit sales had already exceeded internal expectations. The company, which uses the Alcatel brand for overseas markets and TCL for China, plans to launch 34 new handset models in the second half of this year and another 32 in 2009.
Its revenue rose just 13 percent from a year earlier to HK$2.34 billion ($300 million) in the first six months of this year. But Liu said growth will be much higher in the second half due to seasonal factors. Back home, the firm that was once China's No. 2 cellphone maker found itself losing ground amid severe competition with local firms, but also sees opportunities amid a telecoms sector restructuring and the launch of 3G services across the world's largest telecoms market.
"China is extremely important. Yet our traditional way of doing business may or may not be suitable to compete with local guys, who are extremely cost-competitive and efficient," he said. "We will not give up the Chinese market for sure, it just takes time," he said. "We have a strategic change right now to serve the Chinese market differently."
Liu said the company has won bids in 3G handset tenders by China Mobile and is now bidding for a China Telecom contract, but declined to elaborate. 3G enables video streaming and faster Internet access on phones. "We have an advantage, because we have served all the overseas operators very well. If Chinese telecoms reform requires better quality and better distribution models, we should be able to do it better than the local players," Liu said.
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