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Hisense bets big on overseas markets
By Ding Qingfen (China Daily)
Updated: 2009-10-22 08:51 Hisense, China's leading television sets maker, aims to grow overseas sales by 300 percent over the next three years and lift revenue from sales abroad to nearly 40 percent from the current 20 percent, top company executives told China Daily yesterday. "From the long-term perspective, Hisense's success lies beyond China," company chairman Zhou Houjian said during the firm's 40th anniversary ceremony in Qingdao, its global headquarters. "The company should not be confining itself to the domestic market any longer; the best resources and effort should go into overseas markets," Zhou said. Currently, 20 percent of Hisense's sales are generated overseas. Last year, the company did sales worth 48.9 billion yuan ($7.16 billion). In the long run, the "markets outside China will contribute to the majority of sales", Zhou told China Daily.
He predicted that Hisense's revenue from sales would surpass $8 billion this year. The Qingdao-based electronics goods maker also wants to become a leading international player in the next five years. The company will enter the US market soon, and the country would be its biggest bet overseas, said another top company executive. Even as the US economy is recovering from the deepest recession in decades, it "will be the focus market and Hisense will enter it next year", said Lin Lan, executive vice-president of Hisense. The company has set up two research and development centers in Chicago and Silicon Valley, but has only a marginal sales presence. Hisense started selling its products overseas in 2003. Now, its products sell in Europe, Australia and Africa. The mid-term plan is, "in the next three years, overseas sales will be three times what it is now, and global sales will contribute 35 to 40 percent to Hisense's annual sales," Lin said. "But it cannot be achieved easily," he added. "Emerging markets will be the growth engine," Zhou said. Hisense will selectively develop "emerging markets, including Australia, Africa, South America and Southeast Asia, as the potential there is great." In Africa, Hisense's televisions account for 80 percent of the market. "The financial crisis at the beginning largely hurt the business," said Zhou. But, the emerging markets helped Hisense beat the economic gloom during the past few months. The company "stuck to the overseas market" and "expanded into more emerging markets", and the situation "improved quickly", he said. Australia and North America outperformed other markets, increasing sales by 162 percent and 110 percent respectively from a year earlier. Many of Hisense's peers such as TCL, another leading Chinese television maker, have said that they too would focus on emerging markets. TCL witnessed double-digit sales growth during the second quarter, helped by sales in the Middle East and South America. Nearly 50 percent of TCL's sales come from overseas markets. Hisense will also invest more to expand manufacturing capability and sales networks in emerging and developed markets, and strengthen R&D efforts, Zhou said. In the next three years, the investment will be doubled annually, Lin said.
Meanwhile, the budget for R&D will "grow bigger", Zhou said, but declined to elaborate. Currently, the budget for R&D annually is "5 percent" of total sales. "My biggest concern is how to get sufficient and quality staff to meet the expanding overseas business," said Zhou. From January to September 2009, Hisense's year-on-year sales and profits grew by 19.6 and 135 percent respectively, and overseas sales rose by 16.28 percent. While China's exports of liquid crystal display panels dropped by 3.12 percent during the period, Hisense, which has been ranked the largest flat panel display maker in China for six years now, increased sales by 45.58 percent.
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