Miruna Codeanu

Xiaomi, Apple, Samsung and the Chinese market

In espresso on October 25, 2013 at 9:13 am

In a previous post I was talking about China going after Apple. It would seem China is favoring Samsung. No, they aren’t. After accusing Apple to corrupt its youngsters, CCTV- China’s national television is now going after Samsung. CCTV is blaiming Samsung for its faulty but popular Galaxy that is crashing frequently.  Samsung is the top selling producer in China and told CCTV they are repairing the faulty devices for free. Read the full story here.  Another target for the CCTV attacks was Starbucks, the American fast-coffee corporation being accused of having very high prices.  There are theories that the Chinese state designed this mass media campaign in order to force companies to lower prices. Then, the Chinese state would be understanding quite well the mechanisms of free market and realized that mass media is the only thing that can quite influence the market and force companies in order to change their policies.  In China it’s not only about Samsung and Apple, there’s also Xiaomi, a smartphone company, whose policies resemble more the ones of Amazon than of Apple or Samsung, selling very cheap smartphones but relying on the profit they make on apps and other features.

For some years now, Chinese has been the most promising of all markets. Companies opened subsidiaries and plants in China, grounding their growth on the Chinese market. Not only consumer goods, but also luxury goods made some money on the Chinese market. Consumers seem to be favoring American brands in front of local brands, under the belief they are better. They seem to be forgetting most of those are manufactured in China. However, favoring multinational brands is a phenomenon experienced in developing countries, that Romania experienced too: remember the “American” chicken and all the hype about the American brands, that we found out, later on, were manufactured in Romania. This fascination will disappear later on, the Chinese band will rediscover local brands. Only that China is somehow still a communist country, with a state owned television company and with some very precise tools to manipulate people.

A few days ago I’ve seen a report on the most promising car manufacturers. This report contained 15 most promising car manufacturers. Out of 15, only 2 are European. The rest are Asian, Chinese and Korean. Would you have considered buying a Chinese car some years ago? You might start considering it, because China owns shares of some very important European car makers and they could decide to expand the market any time soon.  This should tell you something: Asian markets were promising but they were also developing as manufacturers. This, perhaps is one of the most interesting way to develop the economy of a state. Sure, it is easier for centralized communist China. China started as an alternative manufacturer with multinationals moving plants from their mother countries to China. Only, that at the same time, China was growing, China was developing, and with every multinational opening a store in China, was  more and more able to fuel its own development, becoming a real competitor for the ones they were hosting as a manufacturer. Only that, the competition on the Chinese market will be harsh. The central government has tools to control the public opinion and it is not afraid to use them. In terms of  a free economy, with all the ethical amendments, that could just mean PR. This is another reason for which I believe the “buy local” trend will continue growing, and any western company who thinks they can rely on the Chinese market for their growth should seriously reconsider their strategy.

The Chinese government has been forcing companies to have better customer service (Apple), to replace faulty devices (Samsung), maybe will oblige Starbucks to lower the prices in China, but it may prove that China as a market costs more than the actual price, news travel, they travel fast and they definitely affect the image of a company on a whole.

  1. […] rather support Chinese companies in favor of Western multinationals. Remember Apple and China and Xiamo’s debut on the market? Well, yes. China is not only a consumer, but also a competitor. That, plus the fact the Chinese […]

  2. […] in Beijing hosted a Q&A session with Facebook’s CEO. Also remember what happened with Apple in China. In order to enter China one needs diplomacy and lobbying. Zuckerberg’s mandarin could help […]

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