Chairman's Message

Dongsheng_LiDear shareholders:


Amidst a slowdown in the global economy and fluctuating exchange rates, consumer sentiment was low in 2015. We, however, responded well to these constantly shifting market conditions. With concerted efforts by our valued staff, coupled with stringent controls on costs and expenses and an effective “Step Up” product strategy, we were able to secure fifth position among global handset brands in 2015 with a healthy and stable level of profitability.

Last year, from the initial establishment of the twin strategies of “Double +” transformation and internationalisation and continuing with their deeper implementation, we have gradually grown into a global leader both as a smart device manufacturer and an internet application service provider. We have now applied “Intelligence + Internet” across all our products and have promoted the new “Product + Service” business model.

On the product front, we launched a number of innovative smart devices which are widely recognised by the market, including the award winning flagship smartphone alcatel IDOL 3, and alcatel WATCH, the world’s first smart wearable device supporting both Android and iOS operating systems. On the mobile internet application and service side, as of 31 December 2015, the number of cumulative activated mobile users of our mobile internet platform had grown more than 2 times year-on-year to 23.6 million, while the number of cumulative application downloads amounted to nearly 226.3 million. The online financial service platform (third-party mobile payment gateway), which was jointly developed by us and our parent company, TCL Corporation, recognised a settlement amount of HK$3.6 billion, a year-on-year increase of almost 1.5 times. These results showed that we have achieved substantial progress in our business transformations relating to products and user management.

We foresee that the purchasing power of the overall market will be adversely affected by uncertainties in the global economy and continuing economic slowdown in emerging markets in 2016.

However, we also see that it will be a year of opportunities as well as challenges, representing a unique opportunity for us to outpace our peers by unleashing our business potential, enhancing our corporate competitiveness and establishing a bridgehead in a competitive business environment.

Moving forward, we will continue to integrate the spirit of “goals and beliefs, teamwork, execution, tenacity and breakthrough” into our corporate culture, which will be a powerful driving force to propel us to the next level. We will intensify our efforts towards internationalisation and the “Double +” business transformation strategy. In our internationalisation efforts, we will adhere to the strategy of “Focusing on emerging markets, increasing market share in European and American markets”, achieving a leading position in each market by adjusting our sales channels, optimizing our product portfolio and improving our product competitiveness.

In the “Double +” business transformation, we will transition from hardware-based to software-based business, and aim to raise the number of cumulative activated mobile users of our mobile internet platform and downloads per capita, as well as to increase the value and loyalty of users by vertical industry chain integration and horizontal business expansion. At the same time, we will be launching competitive, innovative payment products and financial services to attract more internet-connected business users and to achieve a sustainable income by continuing development of our service segment and unleashing the development potential there.

In addition, we are committed to enhancing our cloud capabilities in Big Data analysis and content distribution, to improve our product ecosystem from the users’ point of view and further broaden our user base.

In 2016, on top of our solid business foundation and healthy financial position, we aim to enhance our four core competencies, namely product technology, industry, branding and globalisation, and internet application services. We will be actively developing user-oriented smart devices and application services, and establishing a comprehensive, expandable service and integrated product platform in order to grasp every business opportunity to become a leading mobile internet enterprise.

Last but not least, on behalf of the Board of Directors, I would like to express my sincere gratitude to our shareholders, customers, suppliers and business partners for their unwavering support. Also, I would like to thank the management and staff for their unstinting effort.


LI Dongsheng

Chairman

23 March 2016