But the multinationals are fighting back.
How?
Cost cutting?
Price wars?
Will they be successful?
Heck will anyone really be successful other then the consumer who gets rock bottom prices?
Would you call this deflationary or inflationary?
THE COMPETITIVE CRUSH
Who will those winners be? China brand watchers pick TCL, Haier, and SVA, a top TV maker. But at this stage in China's tumultuous economy, it's hard to say for sure. Overcapacity has reached 30% in many industries, including televisions, washing machines, and refrigerators, putting tremendous pressure on margins. "Home electronics appliance prices are decreasing 10% to 15% annually," says Chen Kaixun, vice-president of Hisense Electric Co. Ltd., an appliance maker and rival to Haier. "For the price war, the only thing we can do is decrease our costs." Hisense managed 2% profit growth in the first half. The price war has also hit Haier hard; its Shanghai-listed arm pulled off only 6% profit growth for the first half, despite sharply rising sales. And it's not just white goods. Auto prices have fallen 7% in each of the past two years and are expected to drop at least 10% this year. The television glut is especially severe -- and an aggressive export drive has triggered anti-dumping suits from the U.S. and Europe.
In the past year or so, Motorola, Nokia, and Sony Ericsson have rolled out a raft of phones with fancy new functions, pushed aggressively into new markets, and slashed prices.
Mish |
