The largest electrical shop of Ho Chi Minh City has stocked up on all kinds of household electrical appliance from China, Japan, and South Korea. It is not hard to find that the price of Chinese brands is 15-20% lower than similar products from Japan and South Korea.
Several years ago, the price gap between Japanese and South Korean brands and Chinese brands was about 20-30%. The high performance price ratio in recent years has changed the low quality image of "Made in China" in the heart of the Vietnamese since major Chinese brands like Midea, Haier, and TCL set up branches in Vietnam one after another, which exerted great pressure on Japanese and South Korean brands which lowered the price of their products continuously.
The closest price gap was merely 5%, and sometimes their actual price after promotion activities was almost the same to that of Chinese brands during festivals and holidays.
There are various indications that Chinese brands will adopt the magic weapon of "performance price ratio" again by lowering the cost after expanding its production base and augmenting the size and enhancing their brand publicizing and the integration of channel, storage, and distribution etc. They will also increase their support for the local supplier of raw materials to accelerate the localization of raw materials.
Recently, "The 2011 New Products Launch Conference in ASEAN Area by Midea Group" unveiled in Ho Chi Minh City, during which the president of Midea Living Appliance Group ASEAN Division revealed that Midea will invest $40 million on the building of new production base and increase its products to cover all household electrical appliances. It is reported that Midea has already realized the full localization of supply chain and its R&D is also on the way to localization. At present, Midea Living Appliance Group ASEAN Division has become the largest electric fan producer, rice cooker producer, induction cooker producer, and the largest exporter of household electrical appliances in ASEAN area. Many products of Midea have become the leader in the market of ASEAN countries like Vietnam.
By taking this measure, Midea hopes to maintain a reasonable price gap of 10% to 15% with Japanese and Korean brands on the premise of continuous increasing of brand influence, and they want to win more market share in ASEAN with its high quality products, excellent after-sale service and their internationalized brand image.
SOURCE: Midea
AsiaNet 46047
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