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TCL is still struggling to turn round the loss-making TV business that French rival Thomson unloaded on it almost three years ago, highlighting the mixed results Chinese companies have had in managing overseas acquisitions.

At its results briefing on Wednesday, the world’s largest TV manufacturer said it would soon launch a large-scale restructuring of the troubled European unit, which TCL acquired control over through a joint venture established in November 2003.

“When we bought Thomson we knew its American business was going through a lot of troubles, but the European business was doing great,” Mr Li said, admitting that he had underestimated the challenges involved in rescuing Thomson’s business.

“But the market in Europe is changing very rapidly, much faster than our management could handle.”

Mr Li said TCL’s reaction to market demand for flat panel screens had been lethargic, with business still focused on traditional cathode-ray-tube models. “We reacted too slowly to the market changes,” he said.

TCL began drawing up a restructuring plan for the European business in May, and said it would present its new strategy in October. The restructuring will involve management changes and job cuts. According to Mr Li, TCL will readjust its research and development focus and also its supply chain management.

TCL on Wednesday announced a first-half loss of HK$504m (US$64.8m), compared with losses of HK$25m for the same period last year.

The company is also experiencing difficulties at home, reporting a 10 per cent fall in domestic TV sales to 3.73m units.

In spite of the weak performance, Mr Li said he did not regret buying Thomson.

“To go global is the only way for Chinese companies to expand,” he said. “We are certainly heading in the right direction.”

Copyright The Financial Times Limited 2017. All rights reserved.
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