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tomw2008
Squeeker
Joined: Nov 14, 2005
Posts: 19
Status: Offline
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Feb 05, 2006 - 10:31 AM |
 
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| Post subject: Is China going to take over US consumer market |
say in 10, 20 years, like Japan did two, three decades ago, especially in the auto industry, the home electronics industry?
We all know Haier's presence in US, and Chery's tactics to get into the US auto market, the same tactics Korean auto makers used 10 years ago, i.e., the ridiculously low price with free extended warranty.
I am just throwing the question out ... |
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Goosie
Board Grand Dame
Joined: July 16, 2003
Posts: 4802
Location: Singapore
Status: Offline
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Feb 05, 2006 - 10:38 AM |
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^You're at least five years too late with this post. 90+% of the sh*t we buy is made in China already. |
_________________
Nemesis of Political Correctness |
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Henry_Chinaski
Board Lord
Joined: Aug 16, 2003
Posts: 5025
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Feb 05, 2006 - 10:55 AM |
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Goosie I guess Tom's question was different. I think what he means is increase in market share due to branding instead of mere pricing.
And I sort of agree with him: there is a huge effort from specific brands (selected by the government) to increase their participation in developed markets. Haier bid for a number of consumer appliance companies in the latest months (Mayfair comes to mind). I think their strategy is valid and they indeed have a good chance of succeeding (specially with government back up). In the case of Haier this strategy is crucial mostly to develop distribution channels and decrease pressure from retailers (if not mistaken more than 40% of their US sales goes to Walmart, who screws them in return, knowing that Haier need them so badly).
One of the analogies that some people use in relation to China, Korea and Japan is the Olympic games: Japanese and Korean brands became known worldwide after Olympic games in their respective countries mass-marketed their national champions. Wouldnt be surprising if China did the same.
Maybe today as goosie mentions 90% of the "crap" she buys is from China, but they are branded as goods from US manufacturers (Whirlpool buys a lot of stuff from Haier, put their logo in it and sell it as Whirlpool, the so called OEM model).
That's an interesting question Tomw2008. Welcome to the forum and keep up starting intelligent threads... |
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digahole
Rocker
Joined: June 04, 2004
Posts: 778
Location: ultra rich neighborhood
Status: Offline
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Feb 05, 2006 - 11:07 AM |
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US consumer market is already dominated by Asian manufactures, but why Americans are still having the highest living standards? biggest houses, best cars, cheapest living cost (except healthcare)...etc.
so if China will dominate the consumer market or not is not important anymore, America controls most of the world resources. USA has military bases all over the planet, they are not just there to party with local 2 penny hos. They are there to protect the US interests.
So as I mentioned on another thread, unless there is a 3rd world war breaks out one day, Chinese will never ever be able to live like Americans.
WWIII !!! |
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CoffeeHawk_0
Board Buddha
Joined: July 14, 2005
Posts: 14790
Location: 哈哈哈哈哈哈哈哈哈哈
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Feb 05, 2006 - 11:11 AM |
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It took BMW and Mercedes ove 20 years to figure out the US market and get quality up to US standards/desires. It has taken Hyundia 25 years too. The joke in the 60's and 70's was 'all that plastic crap' coming from Japan, but now they're the tsatdard fro many electronics. One big difference is a lot of non-textile things coming into the US from China are not unique Chinese designs but only manufactured in China. There is still a big learning curve ahead for China, but they are committed to it, so wait another ~15 years, but it's coming. I hope GM and Ford and Zenith and IBM have learned their lessons. |
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xay6pack
Raver
Joined: July 13, 2004
Posts: 420
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Feb 06, 2006 - 05:13 AM |
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We used to worry about Japan and now China. It's not any big deal. As long as we have a free trade between the two country it is fair. Now we don't since China government still somewhat control their currency. We also have no one to blame but ourself. We as american wants cheap goods no matter and we have the right to want this with our hard earn money. Most of the cars we buy in US are now made inside US whether its Japanese or not. This means that we still support US market or jobs. |
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tomw2008
Squeeker
Joined: Nov 14, 2005
Posts: 19
Status: Offline
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Feb 06, 2006 - 09:29 AM |
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But the matter of fact is that US is losing manufacturing jobs. With unlimited supply of Chinese workforce whose skillset is improving(though slowly), it is inevitable that most of the manufacturing jobs will move to China. How is the US service industry going to absorb the hundreds of thousands, if not millions, of displaced workers. You can't just send them all to McDonald's or Burger King to flip burgers.
After losing manufacturing jobs to the mainland, both Hongkong and Taiwan are struggling with their economy. I know for fact the same won't happen to US because of a number of things US enjoys, the high-tech industry, the entrepreneurship, the free economy, yadi yadi yada. However the workforce landscape is changing in US due to the rising China, and it would be interesting to see how it plays out in 10, 20 years. |
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Henry_Chinaski
Board Lord
Joined: Aug 16, 2003
Posts: 5025
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Feb 06, 2006 - 02:45 PM |
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Hey tomw2008, not sure you heard about this book The World is Flat from Thomas Friedman. It tries to answer a lot of your questions. It's a pretty interesting book. |
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bougie
Board Buddha
Joined: Nov 20, 2004
Posts: 13424
Location: Wuhan Hubei China
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Feb 06, 2006 - 03:13 PM |
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Interesting that you use Whirlpool in your post, HC. One of their key suppliers is Emerson, an US company that builds their appliance water valves. They just recently set-up shop in Shenzhen within the last year or so, assembling and testing these valves in China (I know this as we have recieved all their US injection molds to produce the plastic parts for them and we just set-up shop in Dongguan to support them).
And this all happened in the last year, and Emerson closed their plant in Sparta, USA because of this. This is definitely not 5 years ago.
I'm also interested about all those manufacturing jobs in North America and what is / will happen when service and other sectors can't even come close to absorb the displacement |
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Henry_Chinaski
Board Lord
Joined: Aug 16, 2003
Posts: 5025
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Feb 06, 2006 - 03:33 PM |
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Oh I see boug.
But then whirlpool would be risking a bit to much in sourcing all its products from the same manufacturer (Haier) and Haier itself would be running a bit of risk in sourcing all their valves from the same supplier as well (emerson). So, just because Emerson just set up shop 1 year doesnt mean Whirlpool wasnt buying from Haier before (specially since Whirlpool has different lines manufactured by different suppliers, Haier, Brastemp, etc etc etc...).
I know for a fact that Haier has been manufacturing stuff for different companies as my former company used to transport a huge amount of their cargo both to whirlpool as consignee and other brands as well. |
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tomw2008
Squeeker
Joined: Nov 14, 2005
Posts: 19
Status: Offline
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Feb 06, 2006 - 03:43 PM |
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Thanks HC for mentioning the book. Will check to see if I can get it from Amazon. |
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bougie
Board Buddha
Joined: Nov 20, 2004
Posts: 13424
Location: Wuhan Hubei China
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Feb 06, 2006 - 03:48 PM |
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They (Whirlpool) are actually one company that is actually dual sources some of their components such as valves. Not that many companies do this due to the tooling costs up front, but what way to build competition into your supply base.
It amazes me how it is similar to automotive - Cost pressures extraordinaire while superior quality is expected and is a given (not a plus, used for marketing and gaining market share). |
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bravojohnny
Raver
Joined: July 08, 2004
Posts: 497
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Feb 06, 2006 - 08:07 PM |
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| Henry_Chinaski wrote: |
| increase in market share due to branding instead of mere pricing. |
I agree with half of what you have stated Henry_Chinaski. Let us switch our thoughts to the IBM/Lenovo deal for a moment shall we?
IBM has shifted its consumer market from that of U.S to China and has sold its PC division to Lenovo, China. As an inflicting result, this jeopardizes the U.S market. According to ITworld.com, a survey conducted by Merrill Lynch, shows that nearly half of IBM PC users will consider switching vendors from the result of the sell-off. Now PC consumers question the "moral integrity" as to whether to purchase from the Big Blue giant or not. On, February 2nd, 2006, HP has declared its intention to become the leading vendor for notebooks with shipments already out as of the end of the fiscal year of 2005.
So why did IBM do such a traturous (treacherous and tragic) thing in the first place. Well it’s no surprise that IBM was losing on in the PC User market and wasn’t even holding on. In fact, revenue fell 12 percent to $24.4 billion after IBM sold its unprofitable personal computer business to China's Lenovo. So this means that IBM switched it’s market from that of USA to that of China as even the Big Boy’s think there is aggressive competition in the US market - mainly HP, Dell, and especially Apple which recently switched to Intel based processors.
So in order to save their ass they decided on a merge with Lenovo. And why not as there is a 18.9 percent stake for IBM in payoffs
So in a wrap, IBM lost its U.S share in the PC user market. The American consumer hardly values IBM now and has made a huge fuss over the trade-off. Meanwhilst, China’s Lenovo and ibm work together to brand themselves in an attempt to gain an early share in the PC user market of Asia, namely China.
**Article is not copy and pasted material |
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rutuman
Low Seater
Joined: June 21, 2005
Posts: 3231
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Feb 06, 2006 - 08:29 PM |
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Henry_Chinaski
Board Lord
Joined: Aug 16, 2003
Posts: 5025
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Feb 06, 2006 - 11:02 PM |
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bravojohnny, IBM doesnt want to sell pcs because it's a shite business to be in. Who is making money selling PCs? Dell? Nobody else is I guess, or very few companies and probably at a very ROI rate. The margins on the pc business are shite compared to services. Why keep a massive overhead sucking cash and energy from the company, in a sagging, commoditized industry if you can use the cash better elsewhere? IBM just makes money on servers in the hardware front. The notebook and pc business is totally shite returnswise IBM knew it and they found a sucker to buy it. They have NOT sold their server business, they have not sold their RD division, they kept THE BEST of IBM for IBM. So, who is the suka? It's Lenovo to me. Wise move. The same factory that manufactures a thinkpad is also manufacturing apple, asus, hp and a lot of other brands, so, a notebook is hardly different between each brand i.e. it's a commoditized product. Designing or even manufacturing computers is a shite business to be in as the margins are so thin and the obsolescence cost is so high. IBM did not have a supply chain good enough to compete with its competitors so why fight a lost battle? IBM's share in January were almost at the same level since it sold the PC division, so, I guess the market sort of approved the deal.
And for a customer to "morally question" IBM's decision they must be pretty idiotic christian talibans of the worst kind. Do you think the board of IBM say "hey we lose a billion dollars in this business, but our customers love our products! let's keep losing money shall we?" Only an idiot would keep bleeding money.
As for "revenue fell 12 percent to $24.4 billion after IBM sold its unprofitable personal computer business to China's Lenovo", well, if suddenly i sell a division that makes a lot of revenue but no profits it means in the end i will have less revenue but will keep my profit constant (increasing my return on capital). I hardly think anyone intelligent could think this is a bad position to be.
Further, the margins of the pc business in asia are RIDICULOUS, anyone "changing" from the US to China market must be an idiot, so, I hardly think this was the rationale of the deal. And last but not least, I guess you are mixing up corporate and personal markets and all that. The decision making process of both consumers are hardly the same so "the consumer lost confidence" and all that crap hardly matters does it? |
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bougie
Board Buddha
Joined: Nov 20, 2004
Posts: 13424
Location: Wuhan Hubei China
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Feb 07, 2006 - 08:50 AM |
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^ seems you shut everyone up here HC. Good post. |
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bravojohnny
Raver
Joined: July 08, 2004
Posts: 497
Status: Offline
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Feb 07, 2006 - 09:45 AM |
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Henry I wasn't against you on this as if you thought I was. If look have a more detailed glance, I quoted the following: " IBM was losing on in the PC User market ". And because IBM was too late to enter this market as it was too competitive, they sold tihs division to Lenovo.
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| "and they found a sucker to buy it." |
And I agree
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| "IBM's share in January were almost at the same level since it sold the PC division" |
Not really, it is namely due to the processors that IBM manufactored for the XBox 360. That is what balanced IBM out.
The main thing I wanted to demonstrate is just because your a big brand doesn't make you the favored player.
"You gotta sucker someone else." |
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shanghaiphooey
Barker
Joined: Nov 26, 2005
Posts: 147
Status: Offline
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Feb 07, 2006 - 01:59 PM |
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I'm totally lost on this bold-letter-guy's logic. |
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