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syedzunair
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Supply Network Guru
Promoting brands in China
syedzunair   3/23/2012 3:06:50 AM
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@Barbara: 

China is emerging to be the biggest consumer market for electronics. What concerns me is that how will marketers build their brand image in China? Predominantly, the market in China is not focused on brand loyalty apart from a few niche items. One can find numerous local brands for say single item like a smartphone, all with more or less the same features the only difference being the price tag. Since, majority of Chinese consumers consider cost over brands it will be interesting to see how enterprises place themselves in China to reach out to the mainstream and the low level consumer segments. 

Himanshugupta
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Supply Network Guru
India is no different for manufacturing
Himanshugupta   3/23/2012 10:53:36 AM
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"companies that have located manufacturing in China have done so for two main reasons: first, low-cost labor; and second, to reach China's vast consumer market..." 

Well India is no different in that sense. But you already know that and we are reading the McKinsey report from different perspective i.e. possibility of local market. Western consumers and Asian consumers think quite differently as far as the spending is concerned. 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. But surely the sheer number (of people) will help the demand. As the saying go, you will not buy a Ferrari until you do not have a road to drive on, the local government have huge responsibility to both attract manufacturing by building infrastructure and give incentive for people to spend.

Wale Bakare
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Supply Network Guru
Re: India is no different for manufacturing
Wale Bakare   3/23/2012 12:29:19 PM
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Do you still carry the mindset of China being low-cost labour place? I think, that stereotypical attribute for cheap labour is being fading off gradually.

syedzunair
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Supply Network Guru
Re: India is no different for manufacturing
syedzunair   3/23/2012 1:31:16 PM
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Wale, 

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. 

Mr. Roques
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Supply Network Guru
Re: India is no different for manufacturing
Mr. Roques   3/23/2012 4:37:50 PM
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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.

What do you think?

Himanshugupta
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Supply Network Guru
Re: India is no different for manufacturing
Himanshugupta   3/25/2012 9:43:59 AM
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@Mr. Roques, i highly doubt that Apple will comeup with cheaper iPhone or Tablet just to grab more market. I have heard a lot about Apple coming up with cheaper Mac about 5 years ago but that has not happened. Apple's strategy to keep the price up and deliver class product has been going well so why try experimenting in a different direction.

Ariella
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Supply Network Guru
Re: India is no different for manufacturing
Ariella   3/25/2012 10:28:04 AM
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@himanshugupata as in the adage, "If it ain't broke, don't fix it." 

Mr. Roques
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Supply Network Guru
Re: India is no different for manufacturing
Mr. Roques   6/22/2012 3:56:24 PM
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Well, thats true. But they have handled the iPhone and iPad market differently (from their traditional computer market). So I think there's room for a lower cost iPad.

nimantha.d
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Supply Network Guru
Re: India is no different for manufacturing
nimantha.d   3/24/2012 1:34:52 AM
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It was before but I dont see it ight now becasue China is much more developed and financially stonger than before.

syedzunair
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Supply Network Guru
Re: India is no different for manufacturing
syedzunair   3/24/2012 3:25:53 AM
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"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.


FLYINGSCOT
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Supply Network Guru
bang on
FLYINGSCOT   3/23/2012 11:27:49 AM
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Great article Barb.  From my travels in China and talking to many folks I heartily agree that branding is the key.  I was amazed how drawn to Western brands the Chinese people are.  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 watch eagerly for the first major Chinese brand to be truly competitive in the eyes of the Chinese consumer.

TaimoorZ
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Supply Network Guru
Re: bang on
TaimoorZ   3/24/2012 4:04:22 PM
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"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.


Ariella
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Supply Network Guru
Re: bang on
Ariella   3/24/2012 9:09:03 PM
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@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. 

TaimoorZ
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Supply Network Guru
Re: bang on
TaimoorZ   3/25/2012 7:44:23 AM
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@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.

nimantha.d
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Supply Network Guru
Re: bang on
nimantha.d   3/25/2012 10:27:14 AM
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I think China is the best place to launch a new product especially electronical items. Im saying this not considering only the population but they are very much risk takers who love to try out the things quickly than the others.

Wale Bakare
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Supply Network Guru
Valued Society?
Wale Bakare   3/26/2012 6:30:41 AM
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Taimoorz, we could factor in so many reasons why made in China western products are of high premium:

1 -  High Wages

2 -  Must Pay Tax

3 - Quality control

4  - Consumer's orientation

In China, and other developing countries all those above are hard for government to implement and enforce. In short, all become possible primarily due to effective and efficient government policies.

 

WaqasAltaf
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Supply Network Guru
Re: bang on
WaqasAltaf   3/26/2012 1:41:58 PM
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@ TaimoorZ

I think your point regarding perceptions of the consumers really needs to be changed is valid. China needs to realize and advertise the efforts it makes towards quality improvements as the main hurdle in Chinese exports making their mark in the local and foreign markets is that the buyers are always unsure about problems they may face and are also disappointed about resale value. The first problem is severe and long lasting therefore image building is the only way out if China needs to survive in the competitive industry. 

WaqasAltaf
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Supply Network Guru
Far-sight
WaqasAltaf   3/24/2012 11:19:29 AM
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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.

TaimoorZ
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Supply Network Guru
Re: Far-sight
TaimoorZ   3/24/2012 3:36:30 PM
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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.

stochastic excursion
User Rank
Stock Keeper
Re: Far-sight
stochastic excursion   3/24/2012 6:29:05 PM
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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.

TaimoorZ
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Supply Network Guru
Re: Far-sight
TaimoorZ   3/25/2012 7:55:26 AM
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I think China's population will ultimately match up with the Japanese population not just in terms of their living standards and lifestyles, but also on how they upgraded themselves and reached to this point.

Jacob
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Supply Network Guru
FDI in China
Jacob   3/26/2012 7:33:04 AM

"As wages begin to rise in the region, companies will have to increasingly shift their focus toward selling to China's consumers in addition to employing them"

Barbara, I don't know how much this is feasible because Chinese governments are interested only in attracting FDI. They are not that much keen in promoting foreign goods or goods manufactured through any MNC in China. Instead of that they are promoting locally manufacturing goods, inorder to boost the internal market and Small/Medium Scale Manufactures.

Eldredge
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Supply Network Guru
Re: FDI in China
Eldredge   3/26/2012 9:23:19 AM
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Good point - this will be a beneficial trend only to the extent that the Chinese government is willing to let foreign products compete in the marketplace. They have spent tha last couple of decades growing their production and manufacturing capabilities, and I am sure they will view it in their own best intesest to encourage and reward internal comsumption.

Barbara Jorgensen
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Blogger
Consumers in China
Barbara Jorgensen   3/26/2012 11:22:11 AM
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@Jacob--a great point that I missed entirely. China is all about promoting China. There are probably some western products that will be consumed no matter what, but as long as there is an alternative Chinese product, I think you are correct.





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