China's Hisense

The Debut of the People's TV

hisense
Hisense has more than made its mark at Euro 2016.
  • Why it matters

    Why it matters

    Hisense lags far behind its Korean rivals Samsung and LG and wants to use the European TV market as a means of catching up.

  • Facts

    Facts

    State-owned Hisense is the first Chinese sponsor of a major European sports tournament.

    The firm already sponsors a German soccer club, a court at the Australian Open tennis venue and Formula 1.

    It has a global market share of TV production of around 6 percent.

  • Audio

    Audio

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Household names such as Adidas, Coca-Cola and McDonald’s are among the sponsors that have helped UEFA, European soccer’s governing body, score record earnings of €400 million ($444 million) from the ongoing Euro 2016 tournament that culminates with this Sunday’s final.

But for the first time in the event’s 56-year history, a Chinese firm has joined the roster of familiar brands advertising at tournament stadiums: The electronics company Hisense is using the high-profile competition to boost its global profile.

The green lettering of its logo shimmers on pitchside hoardings during matches that are watched by millions around the world. But few recognize the name.

Hisense is already the market leader in China. No other company sells as many television sets in the world’s second-biggest economy as the state-owned firm, based in Qingdao. And it has enjoyed its top dog position for 13 years. “But to survive, we can’t just rely on China,” deputy director Lin Lan told Handelsblatt.

“Ahead of the European Championship sales climbed by a third compared with last year.”

Lin Lan, Deputy Director, Hisense

The company is making inroads fast: Globally, it is already in third place when it comes to producing televisions. But it substantially lags behind the top two producers, the Korean firms Samsung and LG. In total, Hisense has a global market share of around 6 percent.

This is not the company’s first time as a soccer sponsor. Fans of the German top league, the Bundesliga, have been familiar with the brand since 2014, when it kicked off its partnership with the team Schalke 04. At the start of the new season this summer Hisense will install the biggest video cube in Europe in the Schalke Arena.

And since 2008, Court No. 2 at Melbourne Park, the host venue of the Australian Open tennis tournament, has borne the name of the Chinese firm. And last year, Hisense became a sponsor of Formula 1 motor sport as well as the U.S. Nascar series.

Mr. Lin is confident this big investment is paying off. “Ahead of the European Championship our sales climbed by a third compared with last year,” he said.

And so they should, seeing as Europe is low on the list of Hisense’s worldwide markets. While the firm has already cracked the billion-dollar-revenues mark in the United States, it only turns around $300 million in Europe.

As part of its global strategy, Hisense is going on a shopping spree. Last year, it bought into the American television market via Sharp. In Germany it has been cooperating with the television set maker Loewe since 2013.

Asked on hints about future acquisition targets, Mr. Lin remained tight lipped. “It doesn’t play a role right now.”

Takeovers could become increasingly complicated for Chinese companies in the future, following the furore over the Chinese bid for the German robotics firm Kuka, which sparked debate on how to protect key European technologies.

Ian Bremmer, founder of the U.S. analysts Eurasia Group, said he welcomes such developments. “The discussion is correct. Europe needs protective measures, such as those we’ve had in the United States for years.”

Other experts, however, have warned against protectionism. “Limitations would be the wrong path. Europe has profited greatly from free trade,” argued Kevin Lu, manager of the private-equity firm Partners Group. Of course, Beijing protects its own companies, he admitted, “but so do Europe and the United States.”

Unlike the aspiring Kuka buyer Midea, Hisense is a state company. “We are not like state firms in the steel or oil sector. The market for household appliances or televisions is completely open,” insisted Mr. Lin. “The state is our biggest shareholder, but we steer the company.”

He stressed that the company hinges on its management, not its investors. “We are a highly profitable business. Last year we could make profits of more than a billion U.S. dollars,” he said.

At the same time, the company is clear that Germany holds the key to the European market. “We are wooing our customers in Germany, for example we have moved our European headquarters from Brussels to Düsseldorf.”

Stephan Scheuer is Handelsblatt’s China correspondent, based in Beijing. To contact the author: scheuer@handelsblatt.com

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