Sony’s decision to place its iconic Bravia television business under majority control of China’s TCL is not just a corporate reshuffling. It is a clear signal of how far China has come from just being a low cost manufacturer to becoming an innovator.
Under this new arrangement, TCL will own 51 percent of the joint venture and control much of the design and all of the manufacturing and display technology. Sony will retain the brand and contribute expertise in their picture processing capabilities, an area where Sony has led the competition. As The Verge noted, the deal “would mark the end of an era for Sony.” TCL, once an upstart maker of cheap large panel TVs , is China’s largest maker of TVs. And Sony, once known for its leadership in premium TVs, is relying on TCL to carry on the brand. That’s the same Sony that’s been one of the most innovative consumer electronics companies in the world ceding the innovation of what was once one of their most innovative product categories to China.
This particular event was seminal to me, as I’ve always viewed China’s capabilities as more than cheap manufacturing. I’ve developed and built many products in China beginning decades ago – not because China labor was cheap, but because I could not get products built in the United States at any price. The interest wasn’t here and our infrastructure wasn’t capable. In contrast, China offered technical proficiency, highly motivated engineers, and dramatically faster time to market, all in addition to low cost manufacturing expertise.
Yet China was routinely dismissed by the press, the politicians, and consumers as the place where cheap labor worked long hours in sweatshop conditions building low quality products. That misunderstanding shaped decades of bad decisions in this country.
China learnerd quickly how to design for manufacturability, iterate faster than Western firms, and optimize entire supply chains by clustering suppliers, engineers, and factories together, a subject covered in last year’s top-selling business book, Apple in China.
We Americans, meanwhile, clung to a comforting myth: that innovation would always remain ours, even if production moved offshore. James Fallows warned against this illusion years ago in The Atlantic. In “China Makes, the World Takes,” he wrote:
“When a country stops making things, it stops learning how to make things — and eventually stops knowing how to innovate.”
That warning has now come to fruition. Manufacturing is not the bottom of the value chain. It is the engine that fueled expertise in design. China understood this while we dismissed it.
Today, TCL does not merely assemble televisions. It designs and builds them end-to-end, shipping tens of millions of units annually and pushing aggressively into advanced technologies like Mini-LED displays. Sony — once the global benchmark for consumer electronics (remember the Trinitron?) — now depends on China’s design and manufacturing to keep the Sony brand alive.
And yet we still haven’t learned and keep making dumb policy decisions. We are now abandoning areas of product innovation that represent the future— wind energy, electric vehicles, solar power, high speed transportation, robotics, and much more. While China invests in modern factories, clean energy, batteries, and electrified transportation, the U.S. government dismisses and even ridicules these product technologies that define the future. We lost manufacuring decades ago and we’re doing everything to lose in product innovation.
