Targeting sports for brand equity

Appliance maker Hisense counts on overseas markets, technology for future growth

Chinese home appliance maker Hisense Group is set to continue its expansion globally and enhance its brand visibility via sponsorship of major sports events.

The strategy is to associate its products like high-quality, large-screen television sets with the content that is watched on such products.

Liu Hongxin, president of Hisense, said the company prioritizes "sports marketing" as its long-term strategy. "Over the years, Hisense has earned a lot of experience and brand growth through sports sponsorships," said Liu.

Hisense said its sales revenue in the overseas markets is expected to reach $6.1 billion in 2019, while brand marketing budget will reach $3.7 billion, or nearly 61 percent of revenue. Revenue share of Hisense in the global television market is estimated to reach 9.2 percent in 2019.

The Qingdao, Shandong province-based Hisense has been relying on its go-global strategy to expand. "Hisense is counting on overseas markets for future growth," said Zhou Houjian, the company's chairman, adding it is targeting the middle and high-end segments of the market.

It aims to become a renowned international brand worldwide and constantly improves the overseas presence to further improve production, marketing, research and development, and localization.

Founded in 1969 as a small radio factory in China, Hisense has grown into a multibillion-dollar global enterprise with a workforce of over 75,000 worldwide.

So far, it has established 17 overseas companies in Europe, the Americas, Africa, the Middle East, Australia and Southeast Asia. It has three overseas production bases to ensure its own supply chain and has 12 R&D facilities around the world.

The company has secured sponsorship deals for the 2018 FIFA World Cup, becoming the first-ever Chinese consumer electronics brand to sponsor the tournament. It was an official partner to UEFA Euro 2016 and a team supplier to Red Bull Racing. It also sponsored the Australian Open in 2014 and other top sports events.

"The main purpose of the UEFA Euro and World Cup sponsorships is to increase brand recognition, create brand equity and deliver it to global customers," the company said in a statement.

According to customs statistics, Hisense TV exports were up almost 31 percent year-on-year by the end of November 2017, way above industry average. From January to October 2017, the unit share of Hisense TV was up to 22.4 percent in South Africa and reached 19.6 percent in Australia, ranked first locally.

In addition, its export sales of air conditioners and televisions increased by 28.3 percent and 34.4 percent year-on-year respectively.

Its overall sales in Japan increased 79.3 percent year-on-year, while revenue rose 67.6 percent. In Australia, Hisense was ranked No 1 in terms of market share.

Buoyed by its overseas success, Hisense is abandoning its strategy of winning market share through low-price products. Instead, it will shift its emphasis to producing the "best-quality products at competitive prices". Liu said, "The high-end products have played a key role in the overseas development of Hisense."

The self-developed ULED technology (which enhances colour, contrast, resolution and motion with a combination of advanced hardware and software), a special operating system used in products sold overseas and outstanding local supply chains have helped Hisense to give effective and timely feedback to the market, said Liu.

The company achieved growth in both sales volume and revenue last year. Its total sales revenue increased 10.7 percent in 2017 and overseas revenue increased 21.3 percent.

According to market research company IHS, Hisense's TV business ranked No 3 globally in 2016 and has held the No 1 spot for market share in China for 13 consecutive years.

The company has carried out a series of acquisitions in the global market and vowed to develop and enlarge its international strategy further for its TV business, R&D, branding and marketing. It will operate multiple brands.