South Korea's home appliance hutch concerns: Channel short-leg brand trust is not high

In the Chinese home appliance market, Samsung and LG from South Korea are latecomers. However, in more than a decade, South Korea’s dukes have passed through in the face of a group of Japanese companies and a number of companies in Europe and America. In the field of "The Jedi Counterattack," it successfully won the market as the fastest-growing and most fiercely-developed foreign-owned household electrical appliance company. It also succeeded in creating a business path of "foreign capitalization brand + localization marketing" and "the labeling, industrialization of foreign brands. The integration of many factors such as the design of the outerwear, the cost of local manufacturing, and the ever-changing marketing has created a new model that is different from other foreign companies.

The chaebol worryed about the Chinese-style guerrilla warfare of the Korean home appliance duo

"A look at foreign brands, second look very pretty, three to see the price is not expensive, four look good." This is the image of Korean household appliances in the eyes of Chinese consumers, perhaps South Korea's Hutch (Samsung, LG ) The root cause of rapid rise in China.

A few days ago, the "China Enterprise News" through the interpretation of the Chinese home appliance industry market competition in the past 20 years found that the Korean home appliance manufacturers, both different from the usual "conservative and cautious" style of Japanese companies, but also different from the traditional Chinese "customer price war" The "scale warfare" style is also different from the style of the "airborne + professional manager team" of European and American companies, not only with Japanese companies occupying the business intelligence of the upper reaches of the industry chain, but also with the flexible and varied marketing level of Chinese companies, and The empowerment of localized professional managers under the modern system of European and American companies ultimately led to the expansion of South Korea’s duo in the global market.

In recent years, China's home appliance industry has stepped into the wave of industrial upgrading, and the market disadvantages of the two major Korean companies have also emerged: out of favor with the market and consumer product strategies, neglecting the consistent adherence to product quality; out of commercial interest The need to actively provoke some irrational competition and conceptual warfare; for the demand for market share, there has been a constant adjustment of the product market price caused by the decline in consumer trust, these are brought about by the development of the Korean duo in the Chinese market Worrying.

Hutch Race: Differentiated Breakthrough

Samsung and LG, who entered China in 1992 and 1993 respectively, faced a complicated market pattern. On the one hand, Japanese companies have established a high brand and market threshold by virtue of their “preemptive” advantages, and on the other hand, they have accumulated. Chinese domestic companies are gaining momentum, and European and American companies have also accelerated their investment in the Chinese market. Under heavy pressure, the two South Korean companies did not hold groups to warm up, but launched a round of “double races”. The company has improved its flexible attributes and tenacious competitiveness in the market.

From TV sets, mobile phones, to refrigerators, air conditioners, washing machines, and computers, Samsung and LG, which were soon to enter the Chinese market, spread their products to diversify their products. However, compared with the current "Samsung, LG has become the world's first and second largest TV manufacturers, the second and third largest mobile phone manufacturers" is different, in recent years in the Chinese market, LG, Samsung, although once included Leading position in color TV, air conditioning, microwave ovens and other industries, but ultimately still play the role of market followers.

In recent years, LG has gradually withdrawn from the mainstream market of white electricity represented by air conditioners, and Samsung has to increase investment in these markets. In the black power field, Samsung and LG have been accused of being behind the scenes of the concept battle of 3D TVs by Chinese companies, provoking mutual attacks that do not flash and shutter technology. Unlike Japanese companies that have retreated to key parts and commercial markets in the traditional white goods market, the two South Korean companies hope to enjoy the entire industrial chain from LCD screens to LCD TVs in the color TV field.

"Excellent followers" are considered to be an important factor in the rise of Samsung and LG in China. In 1969, when Samsung was founded, it was only manufacturing a low-cost 12-inch black-and-white TV OEM for Sanyo. With the mastery of core technologies during the long-term OEM process, Samsung began to move from copy-taking strategy to imitation strategy. Later, Samsung acquired high-tech companies and formed strategic alliances with companies with cutting-edge technology. The way to share technology followed technology leaders and entered the industry chain. In recent years, due to patent issues, Apple is in endless prosecution with Samsung, Apple CEO Steve Jobs ridiculed Samsung as "student fine," ASUS chairman Shi Chongxiu described it as "replica, then you slaughtered."

The "broad vision of globalization" provides huge space for the development of South Korea's dilemma. From the globalization wave of the 1980s, with the strong support of the Korean government, Samsung and LG have strategically opened up overseas markets. In that year, Samsung and LG pioneered the first-line markets such as Europe, America and Japan, and launched brand awareness through high quality and stylish design. With the success of the first-line market, South Korea's Hutchison relied on production bases to expand China's second and third-tier markets.

Double-hung pattern: The rise of chaebols

To interpret the strong rise of Korean household appliances, one must mention the unique "economics of the chaebol economy" of South Korea. Over the years, government industry guidance and economic assistance, coupled with the rapid development of enterprises in the market, have gradually formed a high degree of monopoly on Korean production and capital. Many chaebol-type enterprises rank among the world's largest companies.

However, as a core enterprise controlled by the family, the legal person’s shareholding method occupies the Korean chaebol grouping model of other companies, and covers the first, second, and third industries through diversification, without ordering raw materials, zero Parts, even construction, transportation, and sales have to operate autonomously. What is worthy of caution is that the investment funds of the chaebols do not rely mainly on profit accumulation and stock issuance, but rely on borrowings for borrowing, resulting in a very high capital-liability ratio for enterprises.

At present, Samsung, LG from the R & D of semiconductor chips, to the production of backlight modules, panel production, almost covers the industrial chain from raw materials to complete machine. However, participation in the entire product line competition under the entire industry chain layout, in the early stage of entering the Chinese market also let Samsung, LG through a long detour. Prior to 1997, Samsung Electronics had been implementing a strategy of "winning by quantity" in China, trying to spread its products throughout China. In the early days of LG's entry into China, it was mainly based on low-end price tactics. It reduced production costs through large-scale investment in factories and closely followed Chinese brands on prices.

With the outbreak of the financial crisis in South Korea in 1997, Samsung and LG were forced to start reforming the corporate structure. The main target was the chaebol. They demanded that the chaebols sell non-core companies, and funds should be used to supplement the capital of the core companies and implement specialized operations. In the end, “Samsung” was asked to only operate in the electronics, finance, and trade services industry, and “LG” was asked to concentrate on development in the fields of electronics, petrochemicals, services, and finance. In China, Samsung also adjusted its business focus, no longer pushing the full product line layout, and vigorously marketing, focusing on the entire Chinese market to focus on the competition in key cities. LG has also launched a "first-class strategy" transformation, from the pursuit of scale to the pursuit of profit transformation, to enter the high-end market.

Heroes: Brand Channels

Into the early, rapid development, so that South Korea's Samsung, LG once became China's household appliances market, the most dazzling "foreign brands." However, for Japanese brands that have continued to accumulate trust in the brand formed by Chinese people for more than 30 years, the brand awareness of rapidly rising Korean companies in the eyes of the people is not high.

"Fighting and embroidering with legs", "misleading use", "low cost performance", "faster prices for products", and even being accused of "domestic goods dressed in internationally branded clothes." This is the reason why Korean companies have frequently participated in price wars in the Chinese market in recent years, ignoring their persistence in product quality stability, and even the problems caused by rapid changes in prices.

In addition to the lack of brand trust, Korean companies have also been criticized for their short legs. The rise in the primary and secondary markets does not mask the weakness of Samsung and LG in the rural market in China that has a “broad blue ocean”. Even Jin Rong, the president of Samsung Electronics in Greater China, said in a summer night, “Samsung’s products have not had any advantage in the Chinese rural market.”