(China) TCL pins hopes on multiple branding
December 24,2002
Author: (WEI KE)
TCL, China's biggest home-grown mobile phone maker, plans to launch a multiple-brand strategy next year, a bid to gain a greater share of the country's booming market.
"China's mobile phone market is so diverse, and we believe multiple-branding will meet potential buyers' diverse needs," said Du Xiaopeng, vice-president of Guangdong-based TCL Mobile Communications Ltd.
Since it was established three years ago, TCL has been the company's main brand. Earlier this year, another brand, high-end "Mobo," was launched.
Next year, there will be six brands under the TCL umbrella, focusing on different areas and different users, said Yang Xiaoxi, vice general manager of the company's marketing division.
He declined to elaborate.
TCL previously announced it would offer a line of more masculine-looking handset designs for Chinese men.
Its bigger, darker handsets have made up about 10 per cent of TCL's phone sales since they were launched a few months ago.
With fashionable designs and bright colours, TCL's cellphones have also been popular among Chinese women.
TCL was also the first company to introduce cellphones inlaid with diamonds, which stunned analysts and won applause from Chinese users who hope such luxurious phones symbolize their wealth.
Successful product and marketing strategies have helped TCL capture more than 10 per cent of China's fragmented mobile phone market, indicates Beijing-based market research company CCID.
TCL is now the third-largest seller in China, after Motorola and Nokia.
Yang revealed that TCL's nationwide distribution channels will be restructured in the coming months to support multiple brands.
Besides, the company has mapped out an ambitious plan to multiply its products.
"For 2002, we offered 20 types of mobile phones; next year, we hope to have close to 100 new models," Du told Business Weekly.
Lured by great potential, international and domestic companies have transformed China's mobile phone sector into one of the most dynamic, yet most challenging, markets in the world.
However, the intense competition, coupled with excess supply, has put great pressure on companies' profit margins.
For TCL, gross margins were about 34 per cent at the end of September, about 6 per cent lower year-on-year, a TCL executive said.
Analysts say no one company holds a substantial technological advantage in mobile communications and a glut is unavoidable. Therefore, marketing strengths and segmentation will be further highlighted in future competition.
China's home-grown cellphone companies - who do not possess core technologies and most of whom act as assemblers - must rely more on their sales capabilities.
Local brands are expected to hold 20 per cent of China's 200-million-user market by year's end.
TCL believes local firms enjoy advantages in terms of marketing initiatives and sales channels management.
"We best know the market, especially when competition has expanded from those big cities to small cities and small towns," said Guo Aiping, TCL's chief director for capital operations.
"Foreign companies are not as flexible as local players in marketing in China's different market segments," Guo added.
TCL has introduced several low-end models this year priced below 2,000 yuan (US$241), much less than many of its previous models.
Many of TCL's previous models cost between 3,000 yuan (US$361) and 4,000 yuan (US$482).
The company's cellular business is expected to realize more than 10 billion yuan (US$1.20 billion) in revenues this year, well above the planned 6-billion-yuan (US$723-million) target, a company spokesman said.
TCL will sell more than 6 million cellphones this year.
Last week, TCL reported that unit sales of its mobile phones soared to 4 million, up from about 660,000 year-on-year for the nine months ended September 30.
The company said last month it had quadrupled its mobile phone production capacity, and that it believed sales would grow at least 50 per cent next year.
The company can now produce about 12 million handsets annually, compared with its previous capacity of about 3 million.
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