As a world-class electronics giant, its business covers lighting, consumer electronics, household appliances, medical devices and semiconductors and other fields. As one of the first multinational enterprises to enter the Chinese consumer market, Philips is also synonymous with "high-end imports" in the hearts of many Chinese.
However, Philips, which is deeply rooted in the Chinese market, has been frequently called "European Antarctica" by consumers in recent years. Because these two seemingly incomparable companies actually have a very similar business model - licensing OEM, Philips, which seeks transformation after the millennium, has divested a large number of original businesses, such as Philips display manufactured by TPV Technology, Philips car lamps produced and sold by Shanghai Liangrui, etc., which in turn leads to many "Philips" that can be bought in China are actually authentic domestic products, coupled with not optimistic quality control and after-sales, naturally obtained this nickname.
Today we will meet the European version of the Antarctica and see how the famous Royal Philips chose such an OEM road.
The clock of history turns back to 1891, the year Gerard Philip founded today's Philips in a humble factory in Eindhoven, the Netherlands, and began producing carbon filament light bulbs the following year, after Gerard's brother Anton revolutionized Philips' business philosophy, Philips gradually took the prototype of a modern company.
In 1912, Philips bulb tool factory was officially established, high-quality bulbs not only sold well in Europe but also traveled far to enter overseas markets, and the rapidly expanding Philips soon began to get involved in a new product line. At that time, vacuum tubes, which were rare in the world, were produced from Philips factories in 1920, and in 1939, Philips launched the Philips shaver, which became famous all over the world, and Philips also became a global business in the development of decades, with 45,000 employees worldwide.
With the passage of time, Philips' products became more and more abundant, began to sell televisions in 1949, and in 1950 Philips Records was established, and the small light bulb factory in Eindhoven at that time showed its ambition to become a giant step by step; After the end of World War II, Philips, which shifted the group's focus to transistors and integrated circuits, reached new heights and became Europe's leading semiconductor company in the 80s, and I will tell you a very simple example to let you feel its strength - semiconductor manufacturing giants ASML and TSMC were founded by Philips in 1984 and 1985.
By the turn of the century, Philips, after more than 100 years of development, had grown from a small light bulb factory to a world leader in many industrial segments, with sales of 31.459 billion euros in 1999.
However, as the time enters the 21st century, the era of rapid development has caught this century-old store a little unprepared. First of all, the rise in labor prices in Europe and North America has made the royal aristocrat obviously feel inadequate, and secondly, there are strong competitors, not only old rivals such as General Electric, Siemens and Osram and their own fierce competition in many fields, but also the rookies in East Asia have made rapid progress, Samsung, LG, Panasonic, Sony and other Japanese and Korean companies are running very freely on the track that Philips is proud of.
At that time, the global consumer electronics market was growing rapidly, and Philips' business revenue was declining year after year, but Philips, which is famous for its electronics, entered an embarrassing long-term loss and shrinkage, its annual loss in 2011 reached 1.29 billion euros, and in 2012, it announced that it would cut 4,500 employees in order to compete with its Asian counterparts to reduce costs.
In this situation for a long time, Philips, which is difficult to obtain monopoly advantages in price and quality, has to make strategic adjustments, for a world-class company, stagnant business must be intolerated by the group, and what Philips needs is the next area where the whole group can be aggregated.
After all, since the turn of the century, Philips' sluggish revenue growth for many years has been obvious to all, and only Panasonic Electric has exhausted Philips among its competitors, and Philips, which has always pursued technology-driven, even once started a price war with Panasonic in the Indian market. Although the technical strength accumulated in the decades after World War II can still protect Philips' position in the industrial field, with the acceleration of the pace of the market, in such an era of fierce competition, the strategic lag will inevitably restrict the future development of Philips, simplification and specialization have become Philips' only choice, and replacing its old slogan "Let's do better" in 2004 with "Smart, simple in action" is a clear expression of its strategic transformation.
Therefore, in the face of the requirements of streamlining business and seeking transformation, the once proud diversified product line is a bit cumbersome for Philips, and it is imperative to move the knife. In 2005, Philips sold its monitor and flat-screen TV OEM business to TPV Technology (also known as AOC) for $358 million, and TPV also became the world's largest PC monitor manufacturer by receiving the equipment dropped by the bigwigs. This was followed in 2006 by spinning Philips Semiconductors from the group's business and selling 80.1% of the company's shares to a consortium led by KKR for €4.3 billion, making it a completely separate legal entity – NXP, the world's largest automotive semiconductor company today.
And for Philips' sales and sales, this is just the beginning, then it is the turn of Philips once called the "struggling" TV department by the media, it is estimated that the department has caused nearly 1 billion euros in losses for Philips since 2007, it is conceivable that this knife is completely popular will, in 2010, Philips and TPV Technology continued to go forward, outsourcing TV sales, distribution and procurement in China to TPV Technology, in 2013, Philips packaged and sold its audio and video business to Japan's Funai Electric for a symbolic price of 150 million euros, at the same time, Philips also signed a TV brand license agreement with Funai in North America and Mexico, and signed a TV brand license agreement in India with Vidio Control Group.
Of course, the sale and sale are not over, and then to cut Philips' old business - lighting business, after the millennium troublesome lighting business is also Philips' streamlining goal, in 2014, Philips split health technology and lighting into two independent entities, and integrated the LED business and general lighting business into an independent company Philips Lighting - Signify, and merged LED chip manufacturing and automotive lighting business into a company called Bright. In 2016, Philips Lighting sold 80.1% of the shares of Bright Rui to the Apollo fund, keeping 19.9%, and the Philips lights we see in China belong to this "Bright Sharp".
With Philips selling the last 10.7% of its shares in Signify in 2019, it also successfully completed its farewell to the Eindhoven light bulb factory in its place of origin, Philips, which was born for lighting in 1892, announced that it no longer held any shares in the lighting business after 127 years.
At this point, Philips' goal of streamlining the business is only the last - small household appliance business, after Philips CEO Frans expressed his willingness to sell the small household appliance business to make room for the group's medical and health sector, a large number of domestic and foreign investors have expressed their willingness to contact, not only Haier, Jiuyang, Midea and other domestic home appliance giants, but also Hillhouse Capital, Turkish consortium and other professional investment institutions, in the end, Hillhouse Capital, which has deep pockets, won the bid at a price of 34 billion yuan. and obtained a 15-year brand agreement, and Philips, which wished to streamline its business and liquidate it, has since completed the curtain call in the home appliance market.
And we can clearly see from Philips' business adjustment, Philips' business division is expected to achieve sustainable profitability through adjustment and transformation, the rapid growth of medical business in the context of global aging has given Philips stud health courage, by 2019, Philips has 98% of sales from the medical and health department.
But in the whole adjustment process, Philips for the business "slimming" way is not very orderly, can even be described as chaotic, originally for labor-intensive industries that need labor costs, authorized OEM or OEM is beyond reproach, can carry out a high level of integration and outsourcing is also a symbol of enterprise strength, with the help of the manufacturing advantages of Chinese enterprises, seeking a reasonable allocation of their own resources, it can be said that it is a very appropriate business decision, but the road of authorization OEM is not as comfortable as Philips thinks. Although we are serious, if the OEM has made money, it has indeed made a lot of money, for example, according to TPV's 2021 financial report, TPV Technology paid Philips trademark licensing to Philips last year amounted to 1.778 billion yuan, what is this concept? The head brand of the home appliance industry, Jiuyang, has a net profit of only 701 million in 2021, and TPV's 1.778 billion is completely different from its own profit of 1.778 billion for Philips, similarly, Hillhouse Capital has to use the Philips brand to put a tube of blood, according to the agreement, Hillhouse Capital will pay Philips Group 700 million euros in brand licensing fees every year, equivalent to about 4.8 billion yuan. After 15 years, Hillhouse has to pay Philips 10.5 billion euros in brand royalties alone, almost three times the acquisition fee. However, the cash flow of Silala can not cover up the hidden dangers of Philips' previous decision-making, and a look at the development process of Philips in the Chinese market is enough to find that for the Chinese market, Philips does not adopt the mainstream multinational enterprise operation - that is, first establish a Chinese investment headquarters, and then the Chinese investment headquarters will promote various businesses. On the contrary, Philips adopts the model of each product project in the Chinese market, there is no unified command and coordination, although the history of Philips in China can be traced back to 1920, but as a company in China business is still after the 80s began, until today Philips China headquarters are still in a strange position, large company disease in Philips is reflected very obvious, all kinds of management fragility and chaos, naturally affect Philips control of product quality. Take the specific OEM product category after brand authorization, what should be produced and what not to produce, should be strictly controlled, but the OEM often chooses to expand the category in order to make profits, Philips responds with a careless attitude, neither pursuing the manufacturer, nor responding to product problems, all kinds of unheard of Philips products naturally came out, in 2012 there were many Lips rice cooker origin information fraud incidents exposed, consumers looking for official after-sales found that the official website did not have outrageous incidents of the product from time to time.
In recent years, Philips brand products have blossomed everywhere, what electric fans, heaters, juicers, electric kettles, coffee machines, pressure cookers have been listed, many of which in addition to the Philips logo and Philips can be said to have nothing to do with it, taking Philips' air conditioning business as an example, in 2018 first operated by Meibo air conditioning OEM, in 2021 it was transferred to the former Gree Hebei general representative Xu spontaneously controlled Nanjing Zhipu and Shanghai Feili Technology, and then entrusted Meibo, Skyworth, Changhong, Hisense and other manufacturers OEM. After inquiring about the detailed list of Philips air conditioning foundries, I found that the general who ran away under Miss Dong was completely fooling of consumers, such as the Noble "high-end" cabinet in a Philips air conditioner self-operated east, which was manufactured by Changhong, and the performance parameters were almost the same as Changhong's Q5D series products 4 years ago, but the price was nearly 4,000 yuan more expensive, which was completely the rhythm of selling logos. And just when Philips was immersed in the happiness of "lying and earning", the quality of the product had already followed. Philips has also become a celebrity on the notice of the quality supervision department, and in February this year, the State Administration for Market Regulation announced that the nominal Philips brand electric oven was detected as unqualified for stability and mechanical hazards. In April last year, the Guangdong Provincial Market Supervision Bureau reported that the hair dryer radiation project of the nominal Philips brand was unqualified. In May 2020, the Jiangsu Provincial Market Supervision Bureau reported that the internal wiring project of Philips' household vacuum horizontal vacuum cleaner was unqualified. Similar notifications and consumer complaints are common, Baidu search Philips product recall, search results have 1,740,000 results, search for Philips on the black cat complaint platform, there are also 3980 results, in the enterprise search search Philips, there are more than 3,000 results, just to distinguish Li Ghost Li Kui will take half a day of effort, such disorderly management, naturally brings quality is uneven.
In fact, as early as 2013, Lu Libo, an expert in the mainland home appliance industry, once commented that Philips "has both the arrogance of the old European giants and the big organizational shortcomings of modern large companies, and it is likely to be eliminated by the market in the future because of this attitude of not paying attention to consumers." "Today, regardless of whether it is eliminated or not, the accumulated dissatisfaction of consumers seems to be intensifying. Although Philips' vision to become a healthcare leader is clear in the process of change, the old business has been largely spun off, and the image of the traditional consumer electronics giant of the past is also leaving us. But for a company based on the world with brand and quality, Philips' transformation road is far from complete, word-of-mouth this immeasurable thing is not the same as the shares to sign an agreement can be cut, for domestic consumers, OEM and OEM news is usually not conspicuously informed on the purchase page, so the consequences of Philips quality control is not strict, that is, consumers pay, people buy for the trust of the Philips brand, information asymmetry and make people shout and get "European Antarcticans" is not wronged.
So why is this kind of OEM always popular? On the one hand, for many foreign brands, even if they withdraw from the domestic market or sell their business, their brand influence will not die out in a while, and monetizing the remaining brand power is also the mainstream idea. On the other hand, in the years of industrial development in the mainland, "foreign brands" and "imported goods" are often the guarantee of quality, and consumers often tend to prefer foreign brands between local brands and foreign brands, coupled with the information asymmetry between the two sides, this trick is naturally tried and tried. In fact, to be reasonable, OEM and OEM, in the industrial field is not necessarily synonymous with inferiority, strong factories need brand value to open channels, strict quality control brand side can also save costs, everyone hit it off for mutual benefit and win-win, for consumers how should it be a beautiful thing, but the reality is very cruel, the problem is in this seemingly win-win link. What is often the reality? The price of selling hang tags is getting lower and lower, I can't wait to give money to sell, anyway, sign an agreement and have money to take, the merchant who buys hang tags can also pick and pick, the logo is pasted anyway, the rest depends on the mood, he can produce then I can also produce, as for quality control? Only the World Health Organization cares, and the final result is that the trust and goodwill of the admiring consumers are consumed in a wave, and they can only give bad reviews with a skeptical face, and then the vitality of the brand is overdrawn and eventually rotten. And then have a negative effect on the entire Philips future layout of products that are extremely difficult to eliminate, so for Philips, which is full of ambition to be a medical and health giant, whether it is taken to the next peak by such a strategy, or to show a former glorious decline, we will wait and see.