Why Chinese Brands are selling like hot cakes? -by Dr. Karpagam, Dean Academics, ISBR B School

Chinese Brands, once upon a time known as cheap and low quality brands are no more the same. From TVs, Refrigerators, mobile phones to fitness brands, Chinese brands are giving sleepless nights to counterpart in Indian brands. The earlier impressions about Chinese products are negative and labelled as lower end items. The consumers were used to avoid when they are learn the product or brand label as ‘Made in China’. The conceptions are no more the reality. The Chinese brands are becoming more and more acceptable.

Pricing can shape Consumer Behavior

Pricing is an opportunity. High pricing mean lost sales whereas low pricing may mean margin left on the table. The right price differentiates brand from the competitor’s brand and places a commercial return to the seller. In addition to this, it provides value to the customer. Beijing based LeEco challenged consumer durable players with a flash online sale in HD TV segment in the range of 4k. Home grown giant Videocon had to react immediately by slashing the price of its 4k TV sets by 20,000.

Last October, Chinese electronics firm Xiaomi sold more than half million smartphones in less than 72 hours during a flash sale with a renowned platform sales. Xiaomi known as ‘Apple of China’ has already clocked a sale to a tune of $1 billion in revenues just in a span of two years after selling its first smart phone in India.

Positioning:

With more than one product on offer, customers will position the product relative to each other in many criteria, and one among is pricing and positioning relationship, Is a brand ‘Up-market’ or ‘Down-market’?  A premium position is associated in the minds of a customer with a higher price. An entry and volume brand requires accessible pricing. In fact Vivo surprised everyone by taking over the IPL sponsorship. This shows the Chinese brands have begun to understand the global consumer needs.

 Cost Advantage:

One of the many stay strategy of the Chinese manufacturers are following a mass-production and mass-consumption formula.. Labour cost in western and central regions in china are comparatively lower when compared to the coastal areas.  They ensure that profit margins are kept low and try to cover it up by the subsequent boost in sales.Liu Dingding, a Beijing –based independent technology expert had earlier told the Global Times, “ As China’s mobile phone market is somewhat saturated, it’s a right choice that domestic brands have started to explore the gigantic Indian market, which is full of opportunities for many people in India still do not own a smartphone. Our brands are looking into the future of India’s mobile phone market”.

Innovation:

The speed of change is such that compared to two decades ago, it is breath taking. They need to Innovate or die. Commoditization drives down prices. The differentiation that stems from innovation always carries an economic premium.True Innovation matters the most for the present and not for centuries hence. Gone are those days, where they were selling the same model for a period of 5-7 years. Things have changed. These manufacturers ensure that every time the portfolio of products is refreshed. Jaipal Singh, Market Analyst (Client devices), IDC India said, “Mobile Vendor ecosystem is going through a multi-dimensional transition. Continuous investment from china-based vendors on retail expansion and high decibel marketing has led to disruption in the plans of home-grown vendors to some extent.”

Yes, it is the high time to understand the consumer needs.

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