China's TCL aims to become one of the world's top five cell phone makers by 2010, which would put itself on par with foreign giants such as Nokia and Motorola.

"We aim to increase our revenues from communications business to 75 billion yuan (US$9.04 billion) by 2010, and to squeeze into the world's top five ranking in the cell phone business," said Wan Mingjian, general manager of TCL Communication Technology Holdings Ltd, the mobile phone-making unit of TCL International Holdings Ltd.

TCL aims to have an annual sales volume of 50 million yuan (US$6.024 million) to turn itself into one of the world's top five cell phone firms, he added.

Last year, TCL Mobile sold 9.8 million handsets, and earned HK$782 million in revenues.

TCL Communications will focus on cell phones, telephones, smart phones, CDMA (code division multiple access) cell phones, global marketing and its battery business in the coming years, Wan said.

TCL's collaboration with France's Alcatel and its successful debut in Hong Kong's stock market will give a major boost to TCL's business and help it become a top global player, the general manager said.

TCL and Alcatel Mobile Phones Ltd (TAMP), a joint venture between TCL Communications and Alcatel, officially began operations on October 10.

The two firms announced the deal in April, and TCL took a 55-per-cent stake in the joint venture. It invested 55 million euros (US$66 million) in cash.

Alcatel holds the remaining 45-per-cent stake.

The tie-up is expected to triple TCL's handset shipments, based on last year's sales.

One of the biggest benefits brought on by the tie-up with Alcatel is TCL Communications will have more say in IPRs (intellectual property rights), said Wan, who is also the chief executive officer of the joint venture.

Chinese mobile phone makers -- such as TCL Communications, Ningbo Bird and Amoi -- have grown rapidly in recent years, but are still being stung by a lack of IPRs.

Domestic makers have long relied on innovative designs and aggressive marketing to expand their businesses.

For example, TCL made its first foray into the cell phone market when it introduced a rhinestone-studded phone model.

Now, due to a shortage of cutting-edge models, TCL faces a counter-attack from its foreign counterparts.

Wan said price wars in the cell phone market are quite intense, and most domestic makers are on the defensive and are slow to introduce new models.

Foreign makers may sacrifice some profit margins in a bid to regain lost ground, he added.

However, TCL has a good opportunity to expand its business.

"I think there will be a breakthrough for leading domestic makers (while small makers will have a tough time)," he said.

"TCL is not on the defensive. We are aggressively attacking the market."

Li Dongsheng, chairman of electronics giant TCL Corp, the parent firm of TCL Communications, said earlier this month he expects TCL Communications to produce 20 million handsets this year.

Wan expects various cooperation agreements between foreign and domestic mobile phone makers will be the mainstream in the future as firms try to adapt more effectively to the Chinese and global cell phone markets.

Germany's Siemens and Ningbo Bird have inked a marketing-related cooperation deal.

The tie-up with Alcatel will help TCL enhance its global brand and expand sales networks across the globe, Wan said.

Under the deal, which was announced in April, Alcatel has an option to swap its holding in the venture for shares in TCL four years after its inception.

Meanwhile, TCL will have an option to buy Alcatel's stake for shares in itself five years after the venture's formation.

"TCL Communications will become a global firm in four or five years, after fully absorbing Alcatel's mobile phone business," Wan said.

TCL Communications made its debut in HKEx (Hong Kong Exchanges and Clearings Limited) late last month.

Its shares closed 20-per-cent higher than the opening price on the first trading day.

Wan noted the successful debut will accelerate the globalization of TCL.

(China Business Weekly October 22, 2004)