Hisense Acquires Toshiba TV: How cheap is Sharp's sequelae?

800 million acquisition worth? "Double 11" just three days ago, China's home appliance giant Hisense Group also shot "buy buy buy." On November 14, Hisense Electric Co., Ltd., a subsidiary of Hisense Group, and Toshiba Corporation announced in Tokyo that 95% of the shares of Toshiba Image Solutions (TVS) will be officially transferred to Hisense. After the transfer, Hisense Electric will enjoy Toshiba TV products. Brands, operating services and other package businesses, and has 40 years of global brand licensing for Toshiba TV. The amount of the equity transfer was provisionally calculated to be 12.916 billion yen, and it is expected that the transaction will be completed by the end of February 2018. In fact, recently this year, China's home appliance companies have set off an upsurge in the acquisition of overseas brands, especially for the declining Japanese home appliances. For example, Skyworth acquired Metz to market in Europe, and Haier purchased GE's home appliance business to open the North American market. Midea Group purchased the Toshiba Group’s loss-making electronics company for more than 80% of the company’s shares for 473 million US dollars last year. Midea Group acquired Toshiba’s white goods business and a 40-year Toshiba trademark. China's home appliance frequent action is also a cause. As most Japanese home appliance companies have lost money, they have entered a transition. For example, in 2010, Sony acquired life science company iCyt Mission Technology Inc. of Illinois, USA and began to get involved in the flow cytometry business, aiming to apply its numerous audiovisual technologies to the highly anticipated medical and biological fields. This way, its home appliance business has become a chicken rib. On the other hand, China's home appliance market also needs to use overseas markets to expand its business. For example, Hisense became the third-largest TV shipment in the world in 2015 with the acquisition of Sharp's North American use rights. This is the first time that Chinese TV companies have won this honor. But this is precisely the problem. In June of this year, Foxconn bought Sharp and let Sharp's huge loss have a respite. Sharp decided to “do it all”, and he sued Hisense to get his license to give Hisense brand rights in North America. According to industry sources, Hisense acquired Toshiba TV business or considered ahead of time how Sharp responded to the use of trademark rights back in 2020. At the same time, Hisense’s home appliance business is further enhanced through the integration of Toshiba’s business. In recent years, Toshiba has continued to sell itself. Toshiba, established in 1875, is a well-known Japanese household appliance brand in the last century, and the image of the "New Age Toshiba" image of Japanese star Sakai Shizu has become the dream goddess of the "80s" generation. With the passage of time, Toshiba now has additional words such as false accounts, losses, layoffs, sales of assets, liabilities, and bankruptcies. As early as the end of 2015, Toshiba sold the land and construction assets (approximately US$25 million) of its independent color TV production plant and two-bay washing machine manufacturing base to Skyworth Group. In 2016, Toshiba sold its subsidiaries, which are mainly white goods businesses such as washing machines and refrigerators, to Midea Group. Now, TV business uses Hisense, and Toshiba’s computer business is also on sale. If you withdraw from the computer market again, Toshiba's business faced with the general consumer will almost disappear, and the ToB color with social infrastructure construction and energy as its main business will grow stronger. In the CRT era, together with Sony, Panasonic, and Hitachi, they were honored as the four kings of the Japanese color TV industry. Although the voice in the era of flat-panel TVs was getting weaker and weaker, especially after the Chinese market was besieged by many brands, the sound of Toshiba TV was barely heard. However, this does not prevent it from having a place in the international market. Before 2010, Toshiba's flat-panel TV shipments consistently ranked in the top ten in the international market. However, due to the lack of marketing strategies in recent years, rankings have declined. However, it is still very hot in the Japanese market. In this acquisition, Hisense Group can obtain the brand use rights of Toshiba TV in the world for 40 years, which will provide long-term and stable development support for Hisense's global expansion. Have eaten a brand authorized loss Hisense acquired Toshiba brand use rights, or based on its sweet taste of Sharp brand licensing. The original American market was Sharp's second largest market after China. Sharp's market share was far behind the current overlords Samsung and Sony. However, due to a misjudgment after 2007, Sharp has hit a large-size LCD screen, including 80-inch and 90-inch 4K smart TVs. However, the Americans who are accustomed to driving and buying cars generally do not exceed the size of the trunk of a car, which limits the sales of large-screen TVs. Sharp's lack of screens below 40 inches caused the market share in the Americas to decline quarter by quarter. By 2009 Sharp was finally surpassed by Samsung and Sony. In 2012, Sharp was forced to start selling the factory and began negotiating with Foxconn's parent company Taiwan Hon Hai to sell the Mexican factory to the other party. However, the reduction in fixed costs could not be discussed. The two parties did not reach an agreement on the relevant conditions until the end. This plan was aborted in 2013. There was no way. On July 31, 2015, Sharp finally sold its North American operations to China's largest color TV manufacturer Hisense Group. Hisense took over the Mexican plant of Sharp's North American TV brand five years later. In January 2016, he took over the Mexican plant, followed by spending US$30 million (about 197 million yuan) on capacity upgrades and employee incentives. In the month of operation, the factory's production efficiency has doubled, and the Mexican plant has become Hisense’s largest overseas production hub. The strategic position of the factory will greatly reduce the supply time to the U.S. market to one month. After vibrating the Sharp North American plant, in 2015, Hisense's global TV shipments surpassed Sony's ranking third in the world, behind Samsung and LG. In 2016, global LCD TV sales reached 219 million units, an increase of 1.6% year-on-year. Hisense ranked third, with shipments up 3.9% year-on-year to 13.3 million units. According to Hisense's official microblog, in 2016, Hisense Television Online sold 5.5 billion+, and the high-end large screen accounted for 3/4 of the global market share. All this was seen in Sharp's eyes. Obviously he felt regret. And Sharp itself was eventually acquired by Foxconn, which had been rejected initially, to survive the financial crisis. Sharp immediately sued the Hisense Group in the United States, claiming that Hisense violated the contract to sell low-quality goods and demanded the resumption of its trademark rights in North America. Sharp also broke off Hisense Group's panel supply. At present, the overseas lawsuit between Hisense Group and Sharp is still in progress. Not only that, Sharp has re-approved a trademark for high-end televisions in the United States, and it is estimated that it will begin sales in April next year. It is reported that Foxconn and Sharp are also preparing to manufacture large-size LCD panels in the United States, and set up a TV assembly plant. The final details of the project have not yet been finalized. TV sets are relatively large, so Sharp wants to set up factories in the United States to supply the North American market at close quarters. As a result, the good momentum of Hisense in North America has become precarious. Make up short board Sharp's courage to publicly tear up the agreement and his confidence in Hisense's efforts are strong. That's because Sharp is the internationally recognized "Father of LCD" and has world-class technology in the field of LCD panels. Sharp has also long occupied the high-end status of the TV market. . If consumers want to buy large flat-panel LED LCD TVs with a size of more than 60 inches, there is no doubt that Sharp TVs have an advantage regardless of the quality or service life. Sharp is located in the tenth-generation LCD panel factory in Sakai, Osaka, Japan. This factory mainly cuts 60-inch, 65-inch, and 70-inch LCD panels. It is also the only tenth generation panel factory in the world. After the Foxconn Group took over, it decided to make Sharp a more affinity for the people, the market share of a higher brand, through the integration of Foxconn's strong manufacturing capabilities, Sharp TV's future costs will also decline, price competitiveness will also increase. In this way, both the cost-effectiveness of China's home appliance companies and the Japanese home appliance confrontation and the manufacturing industry chain's two major advantages will be affected. Although Hisense has ranked first in the country in terms of market share in recent years, and the number of domestic users is nearly 20 million, its performance is not satisfactory. According to the third quarter report of Hisense Electric, the company’s operating income was 23.746 billion yuan, a year-on-year increase of 7.57%. However, the net profit attributable to the shareholders of the listed company was only 600 million yuan, a significant drop of 47% year-on-year. Since 2017, Hisense’s net profit has plummeted since the beginning of the year. In the first quarter, the net profit attributable to the shareholders of the listed company was 269 million yuan, a year-on-year decrease of 49%, which was also maintained in the third quarter. Moreover, due to the declining performance, in the first trading day after “May Day after 2017”, there has been a rare low limit for White Horse's Hisense Electric. Why does Hisense suffer from net profit lubrication? Hisense officials said that the company's net profit decline was mainly affected by rising material costs, especially panel prices. According to industry sources, the average price of panel prices has risen by about 40% since 2016, but the transaction price of color TV sets sold to consumers has only increased by about 12% to 13%. That is to say, the entire manufacturers are not like panels. As much as the manufacturers have risen so far, the direct result of this is that the overall machine manufacturer's profit margins have fallen. Therefore, if Hisense wants to change its unfavorable situation, it must first exert its force on the TV panel to make up for its own technical shortcomings. Although in the domestic television industry, Hisense Electric is known for its powerful technology, and has the right to speak in three major areas of laser television technology, ULED TV technology, and smart TV technology, especially ULED TV technology, which has improved LCD image quality and attracted Sony and TCL. Business follow-up. However, in recent years, OLED TVs and QLED TVs have gradually emerged, and Hisense has no advantage in these two areas. Founded in 1969, Hisense, which started with "Qingdao Radio No. 2 Factory", is not as deep in root as Toshiba, which is a well-known 100-year-old company in the global appliance industry. It has unique OLED engine technology and super-resolution technology in the Japanese TV industry. At the top of the list, its high-end OLED TVs are very popular in the international market. As early as the CRT era, Toshiba together with Sony, Panasonic, Hitachi, was honored as "the four kings" of the color TV industry in Japan. Although the influence in the era of flat-panel TVs has declined, this does not prevent Toshiba from having a place in the international market. Before 2010, Toshiba’s flat-panel TV shipments consistently ranked in the top ten in the international market. Today, Toshiba still dominates the Japanese market and sales in 2016 are still among the top three in the Japanese market. Toshiba’s rich accumulation of display technology in color TV sets makes Chinese companies represented by Hisense indifferent. Toshiba has an excellent R&D team in Japan and has accumulated profound technical skills in TV picture quality, chips, and audio. It is worth mentioning that this time, Hisense acquired the Toshiba TV business. In addition to the patented technology of Toshiba TV, it also obtained the manufacturing patents for related products including Toshiba commercial displays and advertising displays, as well as the Toshiba technology R&D team. According to industry sources, Hisense’s acquisition of Toshiba TV is to enter the promising OLED TV field. Hisense Electric also stated in the announcement of the acquisition that the acquisition will further expand the global layout of Hisense's R&D, branding and marketing of TV services, and integrate the two sides' R&D, supply chain and global channel resources, and display technologies to each other. Taking long and leveraging each other is of great significance to the long-term development of the company. The transaction is expected to add 3 million TV sets to Hisense, and the 798 million yuan worth of acquisitions by Hisense is more cost-effective. Hisense has been relatively strong in the domestic market, but its performance in the international market remains weak. In the future, Hisense TV will implement a dual-brand operation and urgently need to fill this short board. 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