TCL-Thomson Electronics Corporation: A Failed Joint Venture?

TCL paid 55 million euros to get a 55% equity stake in the joint venture while Alcatel contributed cash and its loss making mobile phone business worth 45 million euros for a 45% equity stake. All of Alcatel's 600 R&D, sales and marketing staff became employees of TAMP.

TAMP distributed Alcatel brand mobile phones in Europe and Latin America and TCL brand phones in China and Asia. Though some analysts praised TCL for taking this bold step, others feared that TCL was overburdening itself as it already had TTE which required considerable attention. They felt that TAMP would further affect the company's overall profitability if not revived quickly...

Industry analysts said that TCL expected the purchase of Schneider and the joint venture with Thomson to help in expanding its business in the west. Commenting on the purchase of Schneider, Stefan Baron, editor-in-chief of German weekly, Wirtschafts Woche, said, "To many German consumers, Schneider had the image of being old-fashioned and unwieldy." In regard to TTE's attempts to shake off the losses in Europe and the US as soon as possible, some analysts said that though the company was taking steps to reduce losses by focusing on the fast growing flat television segment, the low margins in this segment were affecting its revenues. Others felt that it would take at least five years for TCL to get global recognition like Sony or Samsung...