When profits are generated from brands rather than products in a competitive global market, brand acquisition may be the best way to increase profits. This is mainly because the process of developing global brands is slow. A way of shortening it is to acquire existing brands.
For example, TCL which had established itself as a well-known brand in its domestic market, it realized that in order to survive abroad, it has to purchase an international brand. This was also partly because high level of domestic competition is what drove TCL to expand abroad if it wished to survive.
Considering TCL, TCL is a Chinese conglomerate with a broad range of audio-visual products, white goods, PCs and electrical equipment. TCL expanded into emerging markets like Vietnam, Phillipines and Chile with its own brand. But, its expansion into the European market has been through brand acquisition and licensing.
TCL has along term plan to replace these international brands with TCL. Some of the strengths to do this include the position of TCL brand in China. In China, the TECL brand is positioned in the mid to high end of the market. Thereby, TCL enjoys an image of trust and reliability.
In international markets, TCL follows a multi product brand strategy which involves first and second tier branded goods. This is mainly because its core competencies include branded electronic goods manufacturing, product development and service provision.
Thus, TCL evolved from selling to other emerging markets using its own brand, to an original equipment manufacturer in the U.S. in terms of brand acquisition, to acquisition and joint ventures in Europe via combination of brand acquisition and licensing.
TCL entered into U.S through brand acquisition because of the bad experiences of other companies like Konka and the desire to upgrade skills through forced compliance with U.S. regulations.
Stay tuned with Zeeable for more of such updates!!