US media: China's home appliance industry only price war one way?

In the past week, this price war with appliances as the core has dragged consumers, e-commerce, media, experts, and even the government into the game. Behind the embarrassment is a reality that is enough to make people silent. This is a war initiated by e-commerce and the main battlefield is the home appliance industry. Why does China's home appliance industry indulge in price war and cannot extricate themselves? According to Ovid Consulting's data, the sales volume of such large chain channels as Gome and Suning accounted for only 25% of the total sales of home appliances. Why can it easily break the price system of household appliances? Why did the mobile phone industry, whose sales channel and home appliance highly coincided with each other, not been selected by Jingdong to start a price war?

One important reason is that China's home appliance companies have never been freed from the "manufacturer" status. In April 2011, Japan Fuji Economy announced the results of a global market survey of white goods and small home appliances. This survey shows that from a regional point of view, in 2010 China's household electrical appliance production share accounted for 85.3% of the global appliance market, including white household appliances, small home appliances market share has reached 23.4%. According to Fuji's economic forecast, by 2015, China’s home appliance production share will account for 88.1% of the global market, while the market share will also increase to 26.6%.

Overcapacity coupled with sluggish domestic and foreign markets, as well as domestic real estate control policies, led to a backlog of household appliance companies. Flushing IFinD According to the financial report statistics of household appliances companies that have comparable A shares, in the second quarter of this year, the amount of inventory of these household appliances enterprises was as high as 20.193 billion yuan, more than one billion yuan more than at the end of the first quarter. The price war has become a choice that has to be made.

However, excluding macroeconomic factors, one of the core issues in China's home appliance industry that is stuck in price wars is the lack of products that make people shine. The so-called WoW Product in English includes both technical innovation and quality requirements.

Take Apple as an example. When all new Apple products are available, whether they are iPhones, iPads or MacBooks, they are basically the most expensive of their kind.

The price of an iPhone is double or even three times the average price of a Chinese mobile phone. According to the market research institute HIS iSuppli, the average selling price of smart phones in China has fallen below 300 U.S. dollars in 2011, and has continued to decline. Apple's mobile phones still maintain the status of star products. Samsung also announced in May that it could surpass the iPhone 4S Galaxy 3, priced more than 4,000 yuan; as of the end of July this year, Samsung's mobile phone shipments have been more than 10 million units worldwide, the average daily sales of 190,000.

Being detached from the price is just a superficial phenomenon for Apple and Samsung. What's more important is that they have a group of loyal fans. In the ongoing baptism of the iPhone and subsequent Android (Android) machines, high-end smartphones completed the education of the market. The main technical parameters of mobile phones seem to have become part of the common sense of young people in Chinese cities. Price is no longer the only factor or even the first factor to consider.

The high-end market is firmly occupied by Apple, Samsung and HTC and other vendors. As long as they can use a good machine with not too bad publicity, high prices will still be paid. Also from HIS iSuppli's report in August of this year, in the first half of this year, the shipment of Apple's mobile phones in China was 5.2 million units, which accounted for 7.5% of China's smartphone market share; and Samsung's shipment volume accounted for 20.8%. These brands accounted for more than 90% of the profits in the smart phone market, enabling them to invest heavily in R&D and lead the development of the entire industry.

In contrast, the home appliance industry, whether it is to go to home appliance stores or buy appliances on the Internet, most people's path is still relatively high in the trust of the brand to choose cost-effective. The difference is likely due to the fact that some people rely on the Japanese system, others prefer European and American brands, and some people look at the cheap and good Chinese goods. There is no particular difference in home appliances. For example, air conditioners with the same parameters are really stronger than those with the same parameters.

E-commerce companies represented by JD.com have actually lowered the average age of online shopping for electric appliances. However, due to the lack of positive interaction with consumers, professional knowledge has been established. In addition to bargains, it is not much fun and will not form long-term concerns.

Insufficient brand stickiness also causes home appliance manufacturers to be easily kidnapped by channels and price wars. Due to the limited profits, the improvement of its product performance and innovation has been placed in a secondary position, thus causing home appliance companies to fall into a cyclical price war. This has no benefit for the development of the entire industry. As the saying goes, first-class companies engage in patents and standards, second-rate companies engage in products, and the rest is "moving bricks" to fight prices. The bulk of profit is often divided by first-rate second-rate companies. These companies, without exception, attach great importance to the protection and utilization of patents.

Whether it is preemptive Apple, Google, which holds Android, or Samsung, which has come from behind, they are all paying unprecedented attention to patents. The prolonged patent war between Apple and Samsung is the best example.

On the other hand, in China's home appliance industry, "following" is a long-term strategy. Liu Cheng, a doctoral tutor of economics management at Beijing University of Science and Technology, points out that many Chinese home appliance companies spend less than 2% of their total annual R&D investment, which is far lower than the international 15% R&D investment management. Chinese home appliance companies do not want to develop and innovate. Taking Haier as an example, Haier Group ranked 27th in the "Top 50 Most Innovative Companies in the World" list published in the "Business Weekly" of the United States. It ranks first in China's household electrical appliance companies, and its accumulated patent applications are also close to ten thousand. item. However, compared with Samsung, Haier still has a full range of gaps. ZDNet ranks second in the “Global IT R&D investment ranking top 30 in 2011” according to the annual R&D investment scale of global IT and electronic information companies. Samsung Electronics ranked second with US$7.99 billion in R&D investment, and the only Chinese company entering the top 30 It is Huawei.

From the inside of the industry, the home appliance industry has no room for squeezing profits. Taking the industry leader Haier Electronics as an example, according to its financial results for the first half of 2012, the company's unaudited revenue was 26.310 billion yuan, while its net profit was only 748 million yuan. The situation of sales channels such as Suning, Gome, and Jingdong is also not optimistic. Both the sales and profit levels of the former two are declining, and Gome has even experienced the first loss after the listing.

More powerful competitors may enter the home appliance industry from the outside. An example is television. It is the heart of a smart living room. For example, after subverting the music and wireless market, there have been rumors that Apple intends to enter the television field. Although Apple CEO Tim Cook hinted in an interview with analysts in February that Apple TV was just Apple’s “hobby,” Apple’s second-generation Apple TV set-top box had sold 4.2 million units in 2011. Compared with Apple’s scrutiny, Samsung’s “Future TV” ads have been seen everywhere. Skipping the traditional remote control, the technology that can use the gesture to remotely control the TV has appeared on the Wii (home console introduced by Nintendo of Japan) and Kinect (Microsoft's somatosensory peripheral peripheral equipment) a few years ago. It is hard to say It is a future technology, but it is an exploration in the field of television.

For China's home appliance companies, the Internet of Things that has been hot for a few years may be a breakthrough point. What is more appropriate than the IoT technology that promotes the interconnection of various devices in the home appliance industry? The Internet of Things is also a key support area for the country. In February this year, the Ministry of Industry and Information Technology issued the “12th Five-Year Plan of Development for the Internet of Things”. This may be a golden opportunity for the home appliance industry.

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