Extraordinary Genius

The economic crisis in the United States has caused heavy losses to many businesses, including Tom Sun.

As one of the giants in consumer electronics, Tom Sun, the world's number one terminal equipment such as STBs, backdrops, etc., is also the world's top selling channel for DVDs, but they have gone the wrong way on an important project.

This project is a flat-screen TV.

At the time, Feng Yu warned Tom Sun that plasma TV was not worth investing that much, and that flat screen TV would definitely be more advantageous in the future than LCD, because the companies that invested in this camp were hundreds of times more expensive than plasma companies.

Unfortunately, Tom Sun didn't pay attention to this at the beginning, and their R&D investment in plasma was very high, resulting in poor sales.

Although it was later announced that the centre of gravity had turned to the LCD side, plasma television had not given up either. They turned out to be two parallel roads, but completely different from the four star group on the South Korean side.

Originally a highly profitable television business, it subsequently lost hundreds of millions of euros a year.

At the beginning, these billions of euros were lost, which Tom Sun could afford. As a world-class consumer electronics giant with huge assets, hundreds of millions of euros is nothing.

But they also use a credit model for the sale of electrical appliances in Europe and America. That is, the consumer can pay the down payment and then the mortgage payment for the appliance.

This had nothing to do with anything before. A very low default rate can greatly increase their market share, leaving them first in North America and second only to Western children in Europe.

These market share data alone make their brand extremely valuable and the company performs very well on its share price.

But they made the same mistake as equivalents: they shouldn't let their credit companies, hunting for real estate and other financial projects.

In the last two years, when the U.S. subprime lending business flourished, Tomson's credit companies were also involved in the real estate credit business.

While not directly involved in the real estate credit business, they purchased a number of subprime bonds in the belief that they would be able to appreciate and earn money. At that time, they made a lot of money every year.

But nowadays, subprime bonds are going to become junk bonds, and defaults are soaring, causing Tomson, a credit company, to lose a lot of money.

And their electrical credit, their default rate is getting higher. The growing number of bad debts is causing major problems in the functioning of their company's funds.

Even some of their joint ventures around the globe have begun to lose heavily because of the deteriorating economic situation. Like Huaxia's joint venture, India's joint venture, etc.

Increasing losses and decreasing profitability of the profitable business have tightened their capital. Tom Sun's production costs were higher than those of other competitors.

Didn't France apply a four-day working system, which was different from that of other countries? Others work on a four-day basis, but they work 10 hours a day, or 40 hours a week as well, so you can pay less for one day's work and transportation.

Some companies work four days and eight hours, and employees are paid less.

But Tom Sun not only worked eight hours a day for four days, but he didn't cut employees' salaries, which made them less productive and more expensive.

When economic crises occur, they are generally accompanied by factory bankruptcies, and workers are unemployed. Why is that? Because this expenditure is, in fact, the largest part of the company's expenditure.

Thomson's spending in this area is also among the best in the world.

How can a company not have problems when product sales are falling, profits are falling, and even some businesses are losing so much money, they have to pay so much pay and benefits, etc.?

Feng Yu had long warned Tom Sun that their company had great potential dangers. But he and Thomson were just working together, not too closely.

Too much talk makes people think he wants to get involved in running Tom Sun.

At this time, Tom Sun's crisis was entirely their own fault, and Feng Yu had fulfilled his allies' obligations.

In fact, Tom Sun's brand, Feng Yu likes it quite a bit, the sales channels are also very good, there are also many of the world's top technology. But in terms of business management, Feng Yu is very invisible.

Although production costs have also been rising on Huaxia side, have people's wages begun to rise?

But Feng Yu paid them well and asked them to improve their efficiency. And Feng Yu lets the company open factories in India, Brazil and other places, which is a way to reduce labor costs.

And, of course, finding some of the world's top factory agents is one way to reduce costs.

Tom Sun did this to himself at a high cost.

Doesn't Thomson know how expensive he is? Of course they do, but they never cared about it before.

They have a big brand, strong technology, high product added value, good sales, and naturally good profits.

But when sales went down and other brands started competing with them, these disadvantages became apparent.

Thomson never thought that the economic crisis in the US would break out and be so severe. And the impact of this economic crisis on Thomson has been so great.

The crisis will devastate the global economy, and many countries may experience some downturns, most intuitively in terms of falling incomes for many.

Since incomes have fallen, consumption capacity has naturally declined, and the number of people purchasing their products has decreased. Their factories are going to lose production, their profits are going to fall.

These collateral effects have hit Tomson hard. They are now also considering whether to sell some business to ensure that the company can get through this dilemma.

They should be able to handle the winter once they have abandoned the baggage by selling shares in some joint ventures at the outset. As long as the economy recovers, they will be able to make a profit again.

A little more debt, they're not worried, big companies have debt, isn't that normal? As long as the debt ratio does not exceed the safety line, it will be fine.

And the shares they intend to sell in joint ventures such as Huaxia need to be taken over by powerful people who are not yet able to grow their competitors.

So they excluded companies from Europe, island countries, South Korea, targeted their allies, Feng Yu Electronics, etc. Tom Sun then proactively contacted Liu Xianzhi and expressed his intention to sell the shares of the joint venture.

Liu Zhenzhi asked Feng Yu if he would acquire shares in the joint venture. They have measured that these businesses are quite good, and the merger will increase their share in Huaxia and even the Asian market.

Feng Yu refused directly. It sounded nice to increase his share, but it was a burden. That joint venture, which does not include Tomson's brand, is worth considering if it does.

Tom Sun was very angry when he learned that they had been rejected, and they threatened to put themselves in another camp if that was the case!

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