Written by Leon

Edited by Hou Yu

As the heatwave rolls on, the 6·18 shopping festival has kicked off with fervor. For channel merchants and home appliance brands, 6·18 is significant, not only affecting sales performance in the first half of the year but also influencing morale for the second half. Traditional home appliance companies are gearing up for the competition.

Wall Street Tech Eye has exclusively learned that TCL recently launched its fifth employee internal purchase event, but unlike previous years, this year's TCL internal purchase event seems to have transformed into a "6·18 full-staff sales" event.

It is understood that TCL has requested its employees to promote the employee internal purchase event on their social media, including even executives at the VP and director levels.

"The annual employee internal purchase event has begun. Those who need to buy TCL home appliances can get internal purchase prices from me," said a TCL Group executive on social media.

Not only on social media, but also on platforms like Douyin, SMZDM, and Weibo, TCL employees or "TCL Home" distributors can be seen promoting this event, which runs from May 10th to June 20th. By scanning the QR code through WeChat, customers can directly enter the "TCL Home Store of XXX" to select and purchase products, enjoying employee discount prices.

Coinciding with the 6·18 promotion period, TCL's encouragement of employees to participate in sales is self-evident, and offering internal discounts to attract consumers shows the fierce competition. However, it also raises curiosity: is TCL's sales pressure so great that even senior executives need to personally go down to the sales floor?

Competitive Standoff, Testing a New Sales Model

In the consumer electronics sector, TCL's main products include TVs, washing machines, air conditioners, refrigerators, and more. According to the "JD 618 TV Sales Ranking," TCL TVs ranked first in terms of transaction volume from 8 pm on May 31st, 2024, to June 1st, followed by Hisense and Skyworth. Additionally, TCL's sub-brand, LeEco, also made it into the top four. On Tmall, TCL also took the top spot on the "TV Industry Brand Retail Ranking."

In fact, TCL TVs are also very popular in the global market. According to Omdia data, TCL TVs accounted for 12.6% of the global market share in the first quarter of 2024, ranking second globally and continuing the growth momentum since 2023.

On the one hand, TCL has a solid foundation in the TV sector; on the other hand, CSOT, a subsidiary of TCL Technology, a listed company in the group, has grown into a global leading panel enterprise, enjoying advantages in industrial chain synergies.

However, if we calculate based on the overall brand, TCL doesn't have much of an edge. Taking Tmall's "Mid-year Major Home Appliance Brand Sales Ranking" as an example, Midea, Haier, and Gree occupy the top three spots, followed by Little Swan (a sub-brand of Midea Group) in fourth place, with TCL only ranking fifth, closely followed by Xiaomi. Perhaps a sense of potential crisis has led TCL to try to stimulate sales through lower employee internal prices.

When it comes to full-staff sales, Gree Electric Appliances cannot be overlooked. In 2019, Gree Electric Appliances announced its "Ten Thousand People, Ten Thousand Shops" plan, with Chairwoman and CEO Dong Mingzhu first opening a store on Gree's official website and connecting it to platforms like the Gree App and WeChat official account. As a result, some TCL employees jokingly said, "Dong Ge (TCL founder Li Dongsheng) is learning from Dong Mingzhu."

However, in April this year, Gree Electric Appliances has already canceled its full-staff sales system, with significant reductions in sales targets for middle-level managers. Employees are no longer responsible for individual sales targets, and their performance is no longer tied to sales results.

Reasons for Gree Electric Appliances' cancellation of full-staff sales include: first, full-staff sales failed to help Dong Mingzhu achieve her annual revenue target of 600 billion yuan; second, Dong Mingzhu's personal glory in the influencer economy was too dazzling, turning the "Ten Thousand People, Ten Thousand Shops" into "Dong Mingzhu's Exclusive Shops"; third, the full-staff sales system actually encouraged employees to engage in fraudulent order practices to meet KPI targets.

With Gree Electric Appliances' experience as a precedent, TCL's decision not to announce a full-fledged full-staff sales plan is undoubtedly more rational. In fact, in recent years, TCL Group's most powerful business has not been consumer electronics but rather the display semiconductor business at the industrial chain end. This trial may be a signal of TCL revitalizing its consumer electronics business.

Strength in Black Electronics, Weaknesses in White Electronics

Under the guidance of founder Li Dongsheng, TCL Group has grown into a vast capital empire, with listed companies including TCL Technology (000100.SZ), TCL Zhonghuan (002129.SZ), and TCL Smart Home (002668.SZ) on the A-share market, as well as TCL Electronics (01070.HK) on the Hong Kong stock exchange.

Among them, TCL Technology's subsidiary "TCL CSOT" focuses on semiconductor display business, with total revenue of 174.446 billion yuan in 2023, representing a year-on-year increase of 4.69%; and net profit attributable to shareholders of 2.215 billion yuan, representing a year-on-year increase of 747.6%. However, the sharp year-on-year increase in net profit attributable to shareholders actually follows a significant decline in 2022, which was only 261 million yuan.

In fact, due to cyclical issues facing the panel industry in recent years, prices for some sizes have dropped significantly, putting pressure on TCL Technology. Although the panel industry is gradually recovering, balancing the proportion of various businesses and increasing revenue from the consumer end would also be beneficial for the entire TCL Group.

TCL's consumer electronics business is mainly reflected in the businesses of two listed companies, namely TCL Electronics (01070.HK) and TCL Smart Home (002668), which focus on TVs (black electronics) and refrigerators and washing machines (white electronics), respectively.

In terms of TCL Electronics, its total revenue for 2023 was 78.986 billion yuan, representing a year-on-year increase of 10.7%; net profit attributable to shareholders was 744 million yuan, representing a year-on-year increase of 66.36%, which is a relatively ideal growth rate.

From the perspective of business income proportion, TCL Smart Displays are the absolute main revenue driver, with international and domestic sales accounting for 65.7% of total revenue. TCL Electronics' official website states that its global sales volume in 2023 was 25.25 million units, ranking second globally. As mentioned earlier, TCL TVs also maintained their global second sales momentum in Q1 2024. TCL announced that in addition to continuing to promote the dual-brand strategy of "TCL Smart Displays + LeEco," it will also vigorously develop multi-scenario solutions for smart commercial displays and smart home business layouts.

In contrast, TCL's white goods business is relatively weak. TCL Smart Home, formerly known as Homa Appliances, had a total revenue of 15.18 billion yuan in 2023, representing a year-on-year increase of 30.15%; net profit attributable to shareholders was 787 million yuan, representing a year-on-year increase of 6937%, with a gross margin of about 25%. TCL Smart Home currently sells TCL refrigerators, Homa refrigerators, and TCL washing machines. Since the air-conditioning business has not yet been injected into the listed company, its homepage does not display any air-conditioning products.

In fact, TCL Industry owns an air-conditioning division, including TCL Air Conditioner (Zhongshan), (Wuhan), and (Jiujiang) Co., Ltd. According to the 2023 annual report, TCL Air Conditioner's annual production volume exceeded 16 million sets.

Referencing air-conditioner sales data from the 6·18 platforms this year, TCL Air Conditioner ranks seventh on both Tmall and JD.com, with the top six being Midea, Gree, Hualing, Xiaomi, AUX, and Haier.

Overall, TCL's terminal business exhibits a polarization of strong black electronics and relatively weak white electronics. In terms of black electronics, TCL not only needs to catch up with Samsung in the global market but also faces competition from Hisense and LG. White goods such as refrigerators and air conditioners still lag behind competitors like Midea, Gree, and Haier.

As for whether "full-staff sales" is a good idea and how effective it will be, the trial during this year's 6·18 may provide some answers.