The US economic crisis had caused many companies to suffer heavy losses, including Thomson.
Thomson Company, as one of the giants in the consumer electronics industry, is the world's number one in STB, rear projection, and other terminal equipment. Thomson Company's film and television post-production, DVD sales channels, etc. are also the world's top. But they had taken the wrong path on an important project.
This project is flat-screen TVs.
Feng Yu had reminded Thomson that plasma TVs are not worth investing so much in. In the future, LCD TVs will have more advantages because the number of companies investing in LCD TVs is more than 100 times the number of companies investing in plasma TVs.
But Thomson did not take this seriously at the start. They had invested a lot in plasma TVs, but their sales are poor.
Although they had switched to LCD TVs, they did not give up on plasma TVs. In the end, Thomson is also on two different paths, but it is different from Samsung in South Korea.
Their TV business, which used to be highly profitable, is losing a few hundred million Euros every year.
In the beginning, Thomson could bear the loss of hundreds of millions of euros. As a world-class consumer electronics giant, a few hundred million Euros is nothing to them.
But Thomson had also used credit to sell their appliances in Europe and the US. This means consumers can make a down payment and use a mortgage to pay for the appliances.
This does not affect Thomson much in the past. The default rate is very low, and it can increase their market share. Thomson is the number one company in North America and is second only to Simon in Europe.
Just these market share figures had increased their brand value, and the company's share prices are doing well.
But Thomson had made the same mistake as Tong Yong and other companies. They should not have let their credit companies get involved in real estate and other financial projects.
Two years ago, when subprime mortgages were popular in the US, Thomson's credit companies also got involved in real estate loans.
Although Thomson does not deal in real estate loans directly, they had bought many subprime bonds, thinking they can make money. At that time, Thomson's credit companies can make lots of money.
But now, the subprime bonds had become junk bonds, and the default rate had increased sharply. Thomson's credit company had lost a lot of money.
Also, the default rate for their appliances loans is getting higher. More bad debts appeared, and Thomson's company's cash flow is facing big problems.
Even some of their joint ventures around the world started to suffer losses because of the economic situation. For example, Hua Xia's joint venture, India's joint venture, etc.
The losses were increasing, and the profitability of the profitable business was also declining. This made their funds even more strained. Moreover, Thomson's production costs were already higher than those of its competitors.
Doesn't France have a four-day working week? It's different from other countries. Although other countries have a four-day working week, the working time is 10 hours a day, which is the same as 40 hours a week. But this way, you can save a day's travel expenses.
Some companies had a four-day working week, and the working hours were also eight hours. Such companies had already reduced the wages of their employees.
However, not only did Thomson work eight hours a day, but he also didn't reduce the wages of his employees. This caused their production efficiency to decrease and their costs to increase.
When an economic crisis occurs, factories usually go bankrupt and workers lose their jobs. Why is that? This was because this was actually the largest part of the company's expenses.
Thomson's expenditure in this area was also among the highest in the world.
When the sales and profits of their products were declining, and some of their businesses were suffering losses, they still had to pay their employees high wages and benefits. How could the company not have problems?
Feng Yu had reminded Thomson that there were hidden dangers in their operations. But Feng Yu and Thomson were only partners, and they were not close.
If Feng Yu said too much, others might think that Feng Yu wanted to interfere with Thomson's operations.
Thomson's crisis was brought upon by them, and Feng Yu had done his duty as an ally.
Actually, Feng Yu liked Thomson's brand. Thomson's sales channels were good, and many of their technologies were among the best in the world. But Feng Yu despised Thomson's management.
Although Hua Xia's production costs had been increasing, and people's wages had increased.
But Feng Yu was paying them high wages, and he wanted them to increase their efficiency. Also, Feng Yu had asked the company to set up factories in India, Brazil, and other places. This was a way to reduce labor costs.
Of course, Feng Yu had also hired some of the world's top OEM factories to reduce costs.
For someone like Thomson, the high cost was self-inflicted.
Doesn't Thomson know its costs are high? Of course, it knew, but it had never cared about it before.
Thomson's brand was big, their technologies were strong, and their products had high added value. Their sales were good, and their profits were high.
But when their sales declined, and other brands started to compete with them for the market share, their disadvantages became apparent.
Thomson had never expected the US to have an economic crisis, and it was so serious. Moreover, the impact of this economic crisis on Thomson was so great.
The global economy will be hit hard by this crisis. The economy of many countries may decline because of this. The most direct manifestation is that the income of many people will decline.
Since people's incomes have dropped, their spending power will also drop, and fewer people will buy their products. Thomson's factories will have to reduce production, and profits will drop.
The impact of all this was a great blow to Thomson. Thomson is now considering if they should sell some of their businesses to ensure the company can survive this crisis.
At the very least, they must sell some shares of their joint ventures. After getting rid of those burdens, Thomson should be able to survive this winter. Once the economy recovers, Thomson will be able to make profits again.
Thomson is not worried about their debts. Isn't it normal for big companies to have debts? As long as the debt ratio is not over the safety line, it will be fine.
Thomson wants to sell their shares of Hua Xia and other joint ventures, and they need to find capable people to take over the shares. At the same time, they must not strengthen their competitors.
That's why Thomson ruled out companies from Europe, Japan, and Korea, and targeted their ally, Wind & Rain Electronics. Thomson contacted Liu Chuanzhi to express his intention to sell his shares of the joint ventures.
Liu Chuanzhi asked Feng Yu if he wants to buy the shares of this joint venture. Thomson had weighed their options, and these businesses are good. After the merger, they can increase their market share in Hua Xia and even Asia.
Feng Yu rejected Thomson's offer straightaway. Increasing market share might sound good, but it will be a burden. This joint venture does not include Thomson's brand. If it includes Thomson's brand, Thomson will consider this offer.
Thomson was furious when they heard Feng Yu's rejection. They threatened to join other factions if Feng Yu rejected them!
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