Chinese Company, Hisense who were forced to cut a deal with Sharp in the USA, because American consumers saw their own brand as “Cheap” and not necessarily reliable, have now been accused of manufacturing “poor quality TV’s under the Sharp name.
They have also been accused of being involved in deceptively advertising their TV’s which Sharp claim are “shoddy”.
In Australia Hisense is currently rolling out a new TV campaign to grow market share. Earlier this year the Company was bragging that they were the Australian leader in TV’s, their competitors accused them of “buying market share”.
Their financial accounts, reveal that Hisense Australia lifted revenues from $100M in 2014, to $150M in to 2015 to over $180M in 2016 and that despite a major lift in revenues the Company were unable to grow their profits which competitors claim is proof of them “Buying market share”.
In 2015 the Company only paid $1.4M in tax in 2015 which was less than 1% of their total revenues.
In the latest development over the quality of Hisense TV’s Sharp Hisense which licensed the Sharp brand for televisions sold in the U.S because their own brand was not selling has accused Hisense of putting the Sharp name on poor-quality TVs.
In a complaint filed to a California state court in San Francisco, Sharp lawyers said the Japanese company’s brand and trademark “are at risk of being destroyed” by the time the five-year term of the Hisense agreement expires.
The court action is the latest effort by Osaka-based Sharp to retrieve the right to use its own name when selling TVs in one of the world’s largest markets.
As we exclusively tipped recently, Sharp is trying to recover its position as a global maker of consumer electronics.
Hisense rejected the allegations and said it was selling high-quality televisions under the Sharp name.
The background to the case stems from Hisense for years trying to penetrate the US market with their own brand and TV’s made in China at the same plants that Australian models are made at.
When this was not successful, Hisense in 2015, signed a deal with Sharp to use their brand name and a plant in Mexico to make TV’s.
The Sharp deal gave Hisense the right to use the Sharp name on TVs sold in the U.S. through 2020.
At the time, Sharp was in financial distress and selling assets to raise cash.
In 2016, Taiwan’s Foxconn Technology Group, took a controlling stake in Sharp for $3.52 billion, now Foxconn wants their name back as they restructure the business to be a global competitor in the TV market.
It said that under Hisense’s management, the televisions are “shoddily manufactured” and “in many cases, perceived by consumers as cheap.” It said it wanted Hisense to stop using the Sharp name.
Sharp said its testing found the Sharp-brand televisions made by Hisense violated U.S. Federal Communications Commission standards. It said Hisense gave consumers deceptive information about the size and brightness of the TVs, violating other federal standards.
Hisense said it did nothing wrong.
“Hisense categorically denies Sharp’s claims in the litigation and looks forward to presenting its case in the appropriate forum,” a company representative told The Wall Street Journal. “Hisense is in full compliance with the trademark license agreement and Sharp’s attempt to terminate the agreement is of no effect. Hisense will continue to manufacture and sell quality televisions under the Sharp licensed brands.”
In a report by the Wall Street Journal, Waseda Business School professor Atsushi Osanai, who used to work at Sony’s TV unit, said the case was important to Sharp’s efforts to restore itself as a global brand.
“If it wants to revive as a global consumer-electronics maker, Sharp should make every possible effort to retrieve the U.S. TV license because the product, which still occupies the centre of the living room, remains an important marketing tool,” Mr. Osanai said.
The latest financial accounts for Hisense Australia reveal that the Company only spent $2.7M on advertising and marketing despite being a major sponsor of the Australian Tennis Open, Hisense, Arena and a global sponsor of the Red Bull Formula One team and in 2018 they will be a sponsor of the Football World Cup.
Of the $2.7M marketing spend, $1.9M was spent on advertising and $1.26M on business promotions.