Vtech 2002 Annual Report Download - page 9

Annual Report 2002 7
of its wireline telephones and accessories for the term of the license.
The new agreement also enables VTech, after the initial ten years term,
to potentially extend the license for two additional five year renewal
terms provided that certain financial and business performance
criteria are achieved. This would greatly increase our ability in the
future to capture premium segments of the more than 1.5 billion
consumers in the strong markets these new regions comprise.
The agreement represents an important addition to our branding
capability, which was embodied this year by the dynamic new
corporate identity that pervades this annual report and which forms
the basis of new packaging that will begin supporting sales this
calendar year. For ELPs, we have committed to increase spending
on marketing to target consumers, and will launch an aggressive
marketing campaign, designed by the WPP Group.
The use of brand to drive sales, customer loyalty and margins is part
of a much more radical reorientation of VTech that is now underway.
We have built economies of scale in R&D and manufacturing. We
have also, in the past two years, squeezed costs out of our operation
to the point where we are highly competitive from an overhead
perspective.
Our strategy now is to leverage these strengths through not just a
better marketing capability, but by changing our approach to focus
on the customer and extract value from the factory, through the
supply chain to the point-of-sale and service.
We will continue to hone down costs, by automating and
systematizing the improvements we have made to the management
of our supply chain. We are further looking at the supply chain to see
where value can be aggregated to VTech.
Through the use of market research, data-sharing and other
techniques, we are gaining a close and timely understanding of
end-user preferences that will make our product design more market
responsive. We intend to build on our improved sales team structure
by the creation of a customer relationship management system that
enables me and our senior executives to keep informed of key
sources of product demand. We are now examining our operations
to determine the best approach.
VTech is evolving into a new company. As a number of Asian firms
before us, we are preparing to move up the value chain from being
an efficient supplier of products to a company actively creating
demand for those products. In the process, we aim in coming years to
generate more substantial rewards for our shareholders than would
otherwise have been possible.
Allan WONG Chi Yun
Chairman
Hong Kong, 26th June 2002
Message from the CEO
Paddy LAW
Group Chief Executive Officer
VTech Holdings Ltd
Annual Report 2002 7
would like to express my sincere thanks to
all who have contributed in bringing VTech
to where we are today. Our dedication to
emerge from our restructuring to become a
stronger, more dynamic and customer-focused
Group has been a great success.
The Group’s future direction will focus on several fundamental
commitments. We will create an accountability system that will
recognize and reward our best and brightest staff for outstanding
performance. We will also overhaul our IT systems to ensure quick
and transparent communications of business data to streamline our
supply chain processes and achieve greater customer satisfaction.
Finally, we will continue to implement a series of profitability
improvement programs to maximize our shareholders’ value.
By making these commitments top priorities, we will lay the
foundation for making VTech one of the world‘s truly great
companies in the years to come.
Paddy LAW Wai Leung
Group Chief Executive Officer
Hong Kong, 26th June 2002
I