[Outlook]Competition benefits allHaier is a Chinese manufacturer of electric home appliances. Although many Chinese companies are doing well in the world, Haier is one of the bestknown, a brand that Chinese feel proud of. The manufacturer has expanded rapidly, with factories in 13 countries around the world and its products for sale in about 160 countries.
These days, the Chinese company has aggressive advertising campaigns in Korea, with its ads even appearing on the front pages of major daily newspapers. On its Korean Web site, the company boasts of its ambitious goal: “We will do our best to become an alternative brand to Samsung and LG.”
Okay, the company is growing rapidly and is a big deal in China. But how dare it challenge the Korean market! What does it think this country is? Korea is home to Samsung Electronics and LG Electronics, two leading world brands.
Haier must think a lot of itself if it thinks it can shake up the Korean market. Where does such confidence come from? The company, at least, is very confident about its own abilities.
In February, Haier released lap-top computers selling for less than 400,000 won ($420) in Korea. Local computer makers must have felt nervous because of ongoing criticism that Korean computers are overpriced. Haier has also developed the first mobile phone that comes in the shape of a pen. Indeed the Chinese giant manufactures all kinds of home appliances, from washing machines, air-conditioners and microwave ovens to climate-controlled wine cellars. Some 10 years ago, due to the Asian financial crisis, Daewoo Electronics disappeared. Since then, Samsung and LG have divided the domestic market between themselves. Many predicted that this trend would continue for a very long time, but now a new player has joined the race unexpectedly.
Haier’s entry actually deserves applause for many reasons. First, it is creating tension in the Korean market. Haier’s 42-inch LCD TV costs less than 1 million won. Prices of flat screen TVs were already going down but the trend will accelerate, thanks to Haier. The Chinese company’s business in Korea also creates jobs for Koreans. The company generates jobs for store workers and delivery people.
Haier will also balance the market. Just as Samsung and LG do well in the Chinese market, a Chinese company should do the same here. If things are out of balance, something bad tends to happen in the end.
Meanwhile, there are other ads in the papers attracting people’s attention these days. Foreign luxury automobiles, such as Lexus, BMW, Audi and Volvo, appear regularly. Cadillac, the upscale U.S. auto brand, has recently joined in this trend. While Haier digs into the Korean market with price competitiveness, imported cars take the opposite strategy. They often cost two or three times higher in Korea than in the United States or Japan.
Critics say the ads for the high-end cars take advantage of vanity, but sales of these cars are increasing. First of all, people’s incomes have increased. Second, people’s view of imported cars are changing. Even many salary earners say they would willingly buy imported cars if the prices would go down. Japan’s Honda, America’s Ford and France’s Peugeot all aim for this market niche.
Korea’s electronics manufacturers are still robust and doing better than most foreign companies, but the auto makers are not. Still, Hyundai Motor dominates, with some 75 percent of the domestic market, mostly thanks to the patriotism of the government and the Korean people. Foreigners who visit Korea for the first time are often surprised to see Hyundai’s dominance. In particular, this issue irritates the United States. Korea sells more than 700,000 cars yearly in the United States, while we import just 4,000 U.S. cars. This trade imbalance was a big issue for the United States in the recent free trade talks.
In all games, including trade, one needs a partner. If one side wins all the time, the game is not fun to watch. But it is not only about fun.
If one side keeps winning, the game will go against the consumer’s interest. When Haier sells more in Korea, Korean consumers also can buy better Samsung goods for lower prices. When there are many Fords and Hondas on Korean streets, Hyundai cars will cause troubles less often, and Hyundai Motor will offer better service and prices.
*The writer is the international news editor of the JoongAng Ilbo.
by Shim Shang-bok