Following the likes of Tencent, Alibaba, and Xiaomi, Chinese multinational electronics company TCL plans to restructure its business through the sale of nine subsidiaries, pivoting away from consumer electronics and focusing on enterprises.
The Chinese veteran tech company released an official restructuring plan over the weekend, announcing plans to sell its stake in nine mostly consumer-facing appliance businesses to Guangdong-based TCL Industries Holdings, which was set up in September.
The company told TechNode that it would focus on semiconductors and displays as its core business, with an emphasis on research and development of the next generation of display technology and materials.
The company will sell 100% of its shares in five of the companies, including Huizhou-based TCL Household Appliances, while offloading between 36% and 75% of the remaining companies.
After the transaction is finalized, TCL Group’s operating income will shrink to RMB 50.1 billion from RMB 111.7 billion in 2017, the announcement said.
TCL CEO Li Dongsheng said in November that the company was narrowing its business scope to gain a competitive edge. In the company’s plan, one of its subsidiaries, Shenzhen Huaxing Photoelectric Technology Co. Ltd., will produce all mainstream display panels over the next four years.
Leaving the consumer market behind brings increased risks for the company, a person familiar with the company told China Securities Journal.
“The world panel market has experienced a sharp decrease this year. The company has been doing well in consumer-oriented business for years, especially in the deployment of overseas markets, which is one of the reasons why investors are optimistic, ” the person said.
Correction: This story has been amended to reflect that in the case of four of the companies, TCL will offload shareholdings varying between 36% and 75% and not 50% as originally reported.