When China’s TCL Electronics Holdings acquired the Sony name for its television portfolio last month, it had two main objectives in mind: surpass Samsung Electronics as market leader and fend off relentless competition in its home market.
TCL and Sony Group plan to establish a joint venture that will assume Sony’s home entertainment business, the companies announced on January 20, with TCL holding a 51% stake and electronics unit Sony Corporation holding 49%. The new company is expected to start operations in April 2027.
“The new company’s products are expected to carry the globally recognized ‘Sony’ name and ‘Bravia’ name, aiming to create new customer value through these branded products,” the companies said in a statement.
TCL’s share price on the Hong Kong stock exchange briefly rose 18.6% to HKD 12.92 (USD 1.7) the day after the announcement, its highest level in about 20 years. The surge was driven by the belief that absorbing Sony’s business would improve profitability.
TCL posted HKD 99.3 billion (USD 12.7 billion) in sales and HKD 1.7 billion (USD 218 million) in net profit for the year ended December 2024, both increasing for the second straight year. Net profit for 2025 also appears to have increased.
But gross profit margins continue to decline, falling to 16% in 2024, down around five percentage points from 2019.
This decline can be attributed to intense competition in the Chinese market. While TCL’s overseas television sales are more than double those in China, gross profit margins are higher domestically. But with domestic demand sluggish due to the real estate downturn, price competition with rivals is weakening profitability.
Amid that backdrop, TCL aims to leverage the Sony brand to strengthen its high-end lineup in China and North America, the world’s largest television market.
On the website of major US electronics retailer Best Buy, Sony’s 65-inch Bravia TVs are being sold for USD 700–3,500, while TCL TVs of the same size run for USD 380–3,000. Sony has high brand recognition in North America and possesses unique strengths, such as the integration of Bravia TVs with PlayStation gaming consoles.
TCL is expected to focus on expanding sales of Sony-branded products. Group company TCL China Star Optoelectronics Technology boosted liquid crystal display panel production capacity last year by acquiring an LG Display plant in Guangzhou. Consolidating production with the Sony brand will help it improve cost competitiveness.
While TCL and Sony have not disclosed how production and sales for Sony-branded TVs will be handled, Chinese home appliance analyst Liang Zhenpeng said, “TCL’s 51% stake in the joint venture means that TCL will lead all the important processes, including production and operation.”
TCL held a 14% global market share in television shipments last year, ranking second behind Samsung Electronics at 16%, according to forecasts by Chinese research firm Sigmaintell. Sony was in tenth place with a 2% share. The forecast projects that by 2027, TCL’s share, including the joint venture with Sony, will expand to 17%, surpassing Samsung.
TCL is known in China as a long-established major manufacturer of televisions and other home appliances. Its predecessor was TTK Household Appliances, a cassette tape maker established in Huizhou, Guangdong, in 1981.
Li Dongsheng, who joined the company as its 43rd employee and has served as chairman since the late 1990s, pushed the company to expand, making it one of the first Chinese companies to venture overseas, including into Vietnam in 1999.
Li seems to have seen Sony as TCL’s senior as a home appliance maker that pioneered overseas markets. When Li spoke with the late Nobuyuki Idei, former president of Sony Group, in 2021, he said that Idei told him that having the large Chinese market is an advantage for Chinese companies, but it could also hinder their expansion into overseas markets.
There have been previous cases of Japanese TV brands coming under the umbrella of Chinese companies. In 2018, Toshiba sold its Regza brand, which had been seeing declining sales, to Chinese home appliance giant Hisense Group.
Hisense was able to leverage Toshiba’s development capabilities while increasing price competitiveness, leading to a recovery in Regza sales.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.