@Ariella: You'd be surprised to see that there are actually brand-loyal consumers who are willing to spend twice or thrice the amount just because of the brand even when the features are same. Compare how Apple's products cost way more than other brands even when the hardware specifications are not much different. It's all about the brand name that gets them to pay more.
@TaimoorZ Yes, Chinese good are considered to be of inferior quality, but I'm not certain people would pay as much as 3x for a Western brand, though they may be willing to pay some premium.
I wonder how much of the rise in discretionary spending is a result, not of improved conditions for the rank-and-file laborer, but of the cash flow from all the incoming investment dollars and bureaucratic fee structure. Also, China's managerial class is known to be of a caliber that rivals the West, so no doubt they know how to work the organization for wage incentives.
"They told me they would rather pay 3x for a Western brand as they see Chinese products as very poor quality, carrying little kudos"
I've seen this happening as well. Even if the product of the Western brand was also manufactured in China, people would still prefer the Western brand and pay the high price. I think the Chinese brands really have to establish quality standards to build up an image and gain recognition. A part of it would also be to change consumer perception through marketing.
The cost advantage from China will decline (if not disappear completely) in the coming years because of the growing wages. However, the increased income levels in the economy, as Barbara pointed out, will be a key attraction for companies to launch their new products in China and tailor them to suit the Chinese consumers.
To add on to your blog's idea Barb, I think as the incomes of the Chinese people will increase, not only the demand for consumer electronics will increase but also the wage demands, which will in the long run, wipe out the low-cost labour advantages the Chinese economy benefits from. Also I have read on many places the ongoing debate about who will take the lead after Chinese and Indian markets saturate. The far-sighted manufacturers are already trying to explore opportunities in Africa so that they become the pioneers of the revolution.
"Even though the per capita income and the middle class will grow in India and China, we should not expect much increase in spending per person"
I agree with you Himanshugupta, even if the income increases the buying pattern of the people in India and China is different from that of the West. I don't see middle class people in India buying expensive cellphones especially with a high rate of mugging. Instead, I believe that the low cost smartphones will prove to be a success.
Do you think Apple will continue their high-end device only approach? What about the low-end iPhone I heard about a few months ago? I know 200US$ is not much, but maybe they could create really inexpensive smartphone that can compete with the other brands.
I also think the iPad will have a smaller brother, at least eventually. A smaller screen tablet.
I think China still has low cost labour as compared to other regions.
On the other hand, China still has the ability to produce different qualities of products depending upon the price consumers are willing to offer. So during my visit there I found different qualities A,B,C etc of the same product each fetching different price tag.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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