Hisense expanding footprint, enhancing brand awareness

Revenue from overseas markets will take up more than half of the company's total in three years

Chinese home appliance manufacturer Hisense Group is speeding up efforts to expand its global footprint, enhancing brand awareness and influence by sponsoring international sports events.

Zhou Houjian, chairman of Hisense, said the company will expand its business-to-business segment in overseas markets in 2022, showing its determination to drive industry transformation and upgrading, which will become an important direction of strategic development for the company.

"Our internationalization has really started after investing more than 10 billion yuan ($1.57 billion) in the past five years," said Jia Shaoqian, president of Hisense.

He said the company's revenue reached 125.2 billion yuan in the first three quarters, and overseas sales rose 38 percent on a yearly basis to 52.6 billion yuan during the period, accounting for 42 percent of total revenue.

Jia estimated revenue from overseas markets will take up more than half of the total within three years. Hisense aims to record $47 billion worth of revenue by 2025, the company said.

Recently, the Qingdao, Shandong province-based company said it plans to buy Siemens' Intelligent Traffic Systems, which provides solutions for effective road traffic management, for nearly $1 billion, people familiar with the matter said.

The traffic division of Siemens is a world leader in intelligent traffic services and solutions with a history of more than 100 years. The ITS business affiliated to Siemens Mobility operates in more than 40 countries and has an annual revenue of 600 million euros ($677 million).

The ITS unit offers mainly hardware and software for intelligent traffic control and management, from toll systems to traffic light controls.

Hisense is taking the lead in China's intelligent transport industry. It has tapped into this segment since 1998 and its innovative integrated solutions for the intelligent transport industry have been applied in 169 cities across the nation.

Zhang Sihai, president of Hisense TransTech Co Ltd, said the company is actively participating in the bidding of global intelligent transport projects and already won bids in some countries.

It is an inevitable trend that Chinese home appliance manufacturers are stepping up to go into overseas markets to seek new profit growth points and achieve long-term development, said Zhao Meimei, assistant president of Beijing-based market consultancy AVC, adding that if Hisense wins the bid, overseas revenue may account for a larger proportion of its overall sales.

Domestic TV sales reached 17.81 million units in the first half, down 14.7 percent compared with the same period last year, while related sales revenue stood at 59.4 billion yuan, an increase of 15.1 percent year-on-year, said AVC.

The traditional TV market is almost saturated though and companies need to seek new points for growth, said Dong Min, an independent researcher in the home appliances sector.

"Expansion into overseas markets could not only relieve pressure of high inventories in the domestic market but increase the international influence of Chinese home appliance companies," Dong said.

In addition, Hisense aims to boost its brand awareness via sponsorship of major sports events. The company announced in April it is an official sponsor of the 2022 FIFA World Cup in Qatar. Since 2016, Hisense has become a sponsor for several world-class sporting events, including the UEFA Euro 2016 tournament and the FIFA World Cup.

"Continued investment in world-class sporting events represents Hisense's determination to become a global brand," Jia said. "It helps Hisense build stronger relationships with its global consumers and accelerates the company's globalization process. It also creates a solid foundation for us to compete with the world's most innovative and leading brands to become a premier global brand as well."

The company's sales surged 274.4 percent year-on-year in Russia, boosted by the 2018 FIFA World Cup. It also posted robust growth in the United Kingdom, France, Canada, Spain and Japan.

So far, Hisense has established 55 overseas branches in Europe, the Americas, Africa, the Middle East, Australia and Southeast Asia. It has 20 R&D centers and 29 industrial parks and production bases across the globe. Its business includes multimedia, home appliances, IT intelligent information systems, and the modern services industry.

Liang Zhenpeng, a consumer electronics analyst, said setting up production bases in overseas branches not only brings China's advanced manufacturing, research and development as well as management capabilities to overseas markets, but creates job opportunities for local people, and enhances the competitiveness of Chinese enterprises in the global market.

For instance, Hisense purchased Sharp's TV business in Mexico and acquired Sharp America's TV line for the North and South American markets in 2015. It acquired a 95 percent stake in Japan's Toshiba Visual Solutions Corp in 2017 and completed the acquisition of Slovenian appliances producer Gorenje in August 2018.

The company has invested heavily and hopes to lead innovation in laser display technology. Hisense laser TVs have entered many countries and regions, including the United States, Australia, Germany, France, the United Arab Emirates and South Africa.

Overseas sales surged 288 percent year-on-year in 2020. The Hisense 120-inch laser TV gained popularity in overseas sales channels, such as US top electronics retailer Best Buy.

Market research firm Omdia said Hisense laser TVs accounted for 53 percent of global sales in 2020, with Chinese brands accounting for nearly 60 percent.

"In the past, most of the Chinese enterprises adopted the OEM or original equipment manufacturer model, but nowadays they tend to build up their own brands to participate in global competition," Liang said.