Can the likes of Hisense and Haier 'do an LG'?
We’ve long grown accustomed to the manufacturer’s logo on our TVs featuring a South East Asian company’s moniker, although the balance of power has certainly shifted within the region over recent years from Japan to Korea.The inevitable question thus arises, is the current equilibrium about to be upset further by an irresistible force that could leave the South Koreans and Japanese trailing in their wake? The Chinese are coming and who can stop them?
It was the Japanese manufacturers who first spread their wings out of their native territories to great effect. At the turn of the 1980’s a restrictive trade agreement between the USA and Japan was lifted, meaning Japanese manufacturers were no longer limited to 1.75 million televisions in annual exports, thus opening the floodgates for their cheap but well performing products. American electronic companies simply had no answer to this seductive combination and by the end of the 80s, only one US owned TV manufacturer was still standing, although in recent times, at least, Vizio has fought back on the home front.
The Japanese electronic industry went on to dominate the global market and maintained its export strength in the field based on the – usually deserving - high reputation of its products and it wasn’t until some familiar foes from across the Sea of Japan (East Sea, if you’re looking from the other direction) started to challenge that this ascendancy was threatened. In 2006, South Korea’s Samsung Electronics became the global leader in television sales, with its successful blend of affordable, stylish and well-performing TVs and the now giant organisation managed to hold on to top spot until, seven years on, LG has now just taken the crown. Like Samsung, LG hails from South Korea and it is perhaps to them that the Chinese manufacturers should look for inspiration.
LG are a fine example of how a company can rebrand and go on to completely change the public perception of their products. The name LG comes from the two, former, component companies – Lucky and Goldstar – that were known for, how should we say it, entry-level products. Or, to put it more bluntly, they were just another no-name, cheap East Asian brand with little in the way of a good reputation to call upon. Since the name change, LG has successfully managed to shed association from its inglorious past and even created the backronym ‘Life’s Good’ to suit the new company message and goals. Proof, if it be needed, of LG’s metamorphosis comes with the recent news that the sales split of their TV ranges is now 55% premium model weighted; in 2011, their high-end models only accounted for 35% of total revenues in the division.
Although we’ve no tangible proof, the feelings in the West toward Chinese TV brands seem similar to those encountered by Lucky Goldstar at the outset of their re-launch. We’ve had little, to no, exposure to their televisions and the fact that recent showings from them are hi-tech yet low priced might create a cynical attitude that the products may not actually be that good; which would be unfair as we have yet to test one. At CES 2013 the Chinese were more prominent than ever, TCL doubled its space at the show, while Hisense took the space once occupied by Microsoft to show off its wares. Taking advantage of the spot's prominence near the entrance to the Las Vegas Convention Center’s Central Hall, the Chinese manufacturer used all 9,600 square feet available to them to try and convince the industry it was ready to break into the Western market.
“It’s our way of showing the North American market that we are a major player in the world and we intend to be a major player in North America,” said JoAnne Foist, the U.S. marketing director for Hisense at the time.
Hisense certainly seems to have all the necessary technology in readiness for the emerging ‘next-big-thing’ in the industry and had a number of Ultra HD TVs on show, including a 50-inch 4K TV that retails for as little as £1,500 in China. With pricing anything like as aggressive as that in the West, the traditional powerhouses from South Korea and Japan would certainly begin to fear their presence, if they don’t already. As we said above, it seems the greatest obstacle to success is public perception and to try and change that, Hisense have this year embarked upon their first ever print and TV ad campaign in the US. However, they also need to build trading relationships and get a better understanding of western cultures in order to ensure that their marketing can be more successful.
It would seem that now is the perfect time for the Chinese to make big waves on the international market. If they can leverage off their undoubtedly lower labour costs and produce good TVs at price levels the Japanese and Koreans can’t match, what’s to stop them? A fact that JoAnne Foist went on to note earlier this year. “We don’t need to highlight the fact we’re made in China or based in China because, quite frankly, the consumer doesn’t care,” Foist said. “They want good designs, great value and the latest technology.”Whilst Hisense is probably the best example of Chinese intentions, they’re certainly not the only ones and the likes of Haier and TCL will quickly follow in their wake. TCL was the fifth-largest global supplier of LCD TVs in the first half of 2012, according to NPD DisplaySearch, the first time a Chinese producer has made the top five.
The emergence of 4K and OLED (and a combination of the two) gives the Chinese a unique opportunity to be at the starting line at the same time as the rest of the World’s technology companies; a fact that hasn’t escaped the Chinese Government who are making significant investments in large-screen OLED companies. The chance to compete on an almost level playing field with the resources they have available is irresistible and could herald a completely new era in both the landscape and the balance of power within the TV manufacturing industry. Chinese Smarthphone brands like Huawei and ZTE have proved that if the right product can be supplied at the right price, there’s no reason they can’t be successful. Perhaps this time next year we’ll be contemplating a Chinese made, 65-inch 4K OLED TV at a non-coronary inducing price, and who wouldn’t be tempted by that?
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