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Chinese company TCL will strengthen its position in the refrigeration market
04.04.2021 [06:40],
Alexey Razin

Mobile devices and TVs are the most frequently mentioned products of TCL in the news, but the company also produces air conditioners and refrigerators in small quantities. The company is preparing to strengthen its position in this sector against the background of saturation of the domestic market of Chinese television equipment, it was decided to go to the goal through a hostile takeover of one of the refrigerator manufacturers.

Image Source: Nikkei Asian Review

As the Nikkei Asian Review notes, since the beginning of this year, TCL has been gradually buying up shares of Homa Appliances, a Chinese manufacturer of household refrigerators, which in its status is similar to Foxconn in the world of electronics. In other words, Homa Appliances manufactures refrigerators for third-party brands, and 80% of its value is shipped outside of China.

TCL has so far managed to buy about 20% of Homa Appliances, spending about $ 152 million on this. Having become an influential shareholder, the TV panel manufacturer demanded that a representative be added to the Homa Appliances board of directors, for which an extraordinary shareholders meeting was scheduled for April 9th. The management of the absorbed company in every possible way opposes the upcoming change in the ownership structure, so if the deal takes place, then it can be called a hostile takeover.

TCL plan implies business diversification in order to smooth out fluctuations in revenue depending on demand. The Chinese TV market has reached saturation, TCL products cannot bring large profits due to their low prices, and now the company wants to hedge itself by strengthening its position in the refrigerator market.

Many competing Chinese manufacturers are also looking for new market niches. Hisense is trying to settle in the segment of automotive climate systems by purchasing the assets of the Japanese profile manufacturer Sanden Holdings. By the end of this year, Hisense is also going to enter the North American market with Toshiba TVs, it will receive the rights to use this brand in this segment from the middle of the year. Midea Group, another major manufacturer of climate control systems, bought a 29% stake in Chinese medical equipment manufacturer Beijing Wandong Medical Technology in February. Now there is a trend towards business diversification among the players of the Chinese market.

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