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How Chinese Enterprises Become Internationalized in the BRICs Era

May 26, 2005

Dongsheng Li
Chairman & CEO, TCL Corporation

Ladies and gentlemen:

Good morning. First of all, I would like to offer my thanks to the Nihon Keizai Shimbun Publications for giving me this opportunity to discuss the future of Asian economies.

I would like to share with you my views about the status of the Chinese economy in the BRIC era, as well as the future direction of the TCL Corporation as a representative of Chinese enterprises that are being globalized at accelerating degrees.

In the process of economic globalization, the booming emerging economies of the BRIC countries have seen rapid growth. Brazil, Russia, India and China are now showing signs of regarding each other as potential partners. We have much in common in terms of representing the interest of emerging economies on an international scale. Economic development in China, one of the most populous nation in the world, will surely have a major impact on the economic growth of other Asian nations and the world as a whole.

The Chinese government encourages local enterprises to "make positive moves overseas" because the rise of China as a major economic power is dependent upon the evolution of Chinese companies into world-class enterprises.

Against such a backdrop, TCL Corporation has made the first move to become a truly global enterprise.

TCL, founded in 1981, has now become a multi-unit industrial group with a well diversified portfolio, including multimedia electronics, mobile communications, household appliances, electronics, digital electronics and components. We own three companies that are listed on the Shenzhen and Hong Kong stock exchanges, and we are ranked as one of the fastest-growing industrial manufacturers in China. In addition, TCL is among the most valued brands in China.

As part of our globalization strategy at TCL, we are moving into international markets based on our leadership position in the Chinese market. TCL has the leading-edge advantage in the color TV and mobile telephone markets, and has been successful in expanding into international markets on the strength of these businesses. We have been promoting the TCL brand in developing countries. Furthermore, in Europe and the United States, we have focused on the development of our OEM and ODM businesses and formed alliances with local strategic partners through aggressive efforts to merge with and acquire big-name local brands.

By 2004, TCL had business operations in 14 emerging markets with total sales of five million color TV sets and we were firmly established as one of the fastest-growing Chinese consumer electronics enterprises in emerging markets. TCL has come to be known as one of the highest valued Chinese brands in ASEAN countries. Meanwhile, we have successfully expanded our businesses into India and Russia, and we'll soon initiate our business plans in Brazil. We firmly believe that the BRIC countries have the greatest potential for economic growth and market expansion and that, in the days to come, we will have considerable influence in changing the global economic structure.

By acquiring and restructuring the color TV business unit of Thomson of France in 2004,, we entered the European and North American markets and created the world's largest color TV manufacturer. This new partnership was named TCL-Thompson Electronics or (TTE). We were the very first Chinese company to become No. 1 in the world main stream electronics industry. In the same year, we acquired the mobile phone business of Alcatel in a venture that made TCL one of the world's major mobile products providers. Last year, we achieved total sales revenues of 40.28 billion RMB.

A series of such strategic moves catapulted TCL onto the world stage.

We may encounter risks and challenges, but we do believe that we will be the first major Chinese multinational company to succeed in the world. In the BRICs era, TCL will continue to play a leading role in encouraging Chinese enterprises to become globalized. We expect to create win-win situations together with companies from other emerging economies by way of fair competition and cooperation. In the meantime, we are continually looking for more cooperation in the Chinese market with enterprises from other countries including BRICs.

China is a vast country with 1.3 billion people. As a strong member of the BRIC nations, China must develop an independent national industry and foster a group of world-class enterprises with global competitiveness. Chinese enterprises must create and maintain their own brands and operation networks, as well as their own independent supply chains and value chains. Only by achieving such an objective, will China be able to build a strong economy. A sustainable economic growth will ensure the rise of China as a major economic power that will contribute to the development of the global economy.

Thank you very much.

Titles of speakers, names of companies, etc., were correct as of the time when the forum was held.