(Yicai Global) Sept. 4 -- Chinese home appliance companies showed shifts in their focus from output to brand image, from low-end manufacturing to upscale markets and from the Made-in-China model to global supply chain optimization at this year’s Internationale Funkausstellung Berlin (IFA) show, one of the world’s top three high-profile consumer electronics exhibitions, which began Sept. 1.
“The perception of Chinese brands has improved in European markets, where clients now value aftersales service and patent protection more than price,” Sun Weizhong, executive vice president and marketing general manager at the color television division of Skyworth Digital Holdings Ltd., told Yicai Global.
“Catching up with Samsung Group is no longer a dream,” TCL Corp. Chairman Li Dongsheng said. “China’s electronic information industry will definitely outperform Samsung in the near future” as Chinese firms along the upstream and downstream segments of the industry chain work in synergy, the country will become a major competitor in the chipset market in the next few years.
“Chinese enterprises have formed an alliance in Europe,” Sun said. “Hisense Co. sponsored last year’s European Cup, and TCL has ramped up advertising operations in Europe this year.”
Europe is known as a mature market, but color television sales increased slightly in Germany last year and the French market was on the decline overall, Sun said. “New opportunities in the market mainly come from two sources -- intelligent products and internet-based sales channels.”
“In the past, TCL focused on increasing the total volume of foreign exports, but we’ll give priority to the quality of our globalization efforts going forward,” Li Dongsheng said at the IFA. The firm’s improved industrial capacity has enabled it to sell a 3.9-millimeter-thick ultra-compact quantum-dot-display TV for a premium at the show.
TCL’s target is to rank among the three best-selling color TV brands in Europe by 2020, a sales director at TCL Multimedia Europe said.
Haier Group Corp. [SHA:600690], another leading Chinese household appliance maker, has relocated its European production base to Russia following the rollout of the One Belt, One Road initiative. The base went into operation in April last year and has a designed refrigerator production capacity of 250,000 units a year, said Sun Shubao, the group’s marketing general manager. Haier’s refrigerator sales doubled in Russia in the first half of this year.
Changhong International Holdings (Hong Kong) Ltd. has opened two plants on the continent -- a color TV factory in the Czech Republic and a refrigerator compressor plant in Spain, said Wang Yuechun, the group’s chairman. The company will expand the Czech plant into an industrial park for Chinese and Czech joint ventures, Wang said.
Many consider Europe and North America to be the world’s two developed regional markets, and the former has extensive market reach in the Middle East, Africa and Latin America. All global manufacturers view Europe as a key battlefield.
The overall competitiveness of Chinese products has improved relative to other IFA exhibitors as demonstrated by their more innovative products and enhanced brand awareness, but they still need to build their brand influence on consumer markets, said Jiang Feng, Chairman of the China Household Electrical Appliances Association.
Chinese groups have moved away from the export and Made-in-China model toward one that emphasizes bringing China’s brands to foreign markets, Jiang said. Haier and Midea Group [SHE:000333] bought home appliance businesses from General Electric Co. [NYSE:GE] and Toshiba Corp. [TYO:6502], respectively, last year and managed to infiltrate the local mainstream markets, but the aquired brand licenses are only valid for a specified period, so they must globalize their own brands if they want to have a bigger presence, said Jiang.
“To this end, we need to continue our hard work to increase our ability to innovate in the next 10 to 20 years,” Jiang said. Smart home appliances represent an opportunity. Chinese companies need to be more creative and change consumers’ perception of them as low-end brands. “Our goal is to break into the medium- to high-end markets.”