TCL Multimedia restructures European operations

TCL Multimedia Technology Holdings Ltd., one of the world's largest television makers, has announced a major restructuring of its failing European operations.

According to the 45-million-Euro plan detailed on the company's website, an "amicable wind-down" of the activities of TTE Europe, a joint venture between TCL and Thomson has been agreed in which the sale and marketing of all television products in Europe, excluding OEM business, will be stopped. The majority of TTE Europe's current employee base will also undergo reform.

Part of the restructuring costs will be shouldered by France's Thomson Group, a substantial shareholder, and TCL Multimedia may also liquidate some assets and inventories in Europe, according to the company statement.

The plan, which is to take effect in late October and early November, is in response to huge losses incurred by TCL in Europe. The accumulated losses of its European investment had reached 203 million Euros by Sept. 30 this year.

The company predicts the restructuring will cause a 50 percent decline in revenue in 2007.

"We've been supported (in the reshuffle plan for European operations) by the local governments and Thomson Group," said Li Dongsheng, president of parent company, TCL Corp.

He said the restructuring plan was not likely to affect TCL's business outside Europe. "It will not affect color TV sales in China, North America or our emerging markets," he said.

TCL, based in south China's Guangdong Province near Hong Kong, acquired the television and mobile phone businesses of France's Thomson and Alcatel in 2004. The two deals, however, put a heavy financial burden on TCL Corp. and it has never recovered.

In the company's half-year report, TCL announced losses of 738 million yuan (92 million U.S. dollars) despite selling 10.88 million color TV sets in this period, the world's highest sales figures and a global market share of 11 percent.

A few days ago, TCL Corp. announced a plan to raise up to 1.05 billion yuan through a private share placement to institutional investors.

Source: Xinhua