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Week-end Edition - Day 2 & Day 3 - IFA International

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made in CHINA Regional Spotlight The Branding Challenge Chinese manufacturers emerge under their own brand names by Richard Barnes TCL LCD-PANEL PLANT TCL’s completed the vertical integration of its entire TV-manufacturing chain in August with the start of pilot operations at the China Star Optoelectronics Technology (CSOT) plant. The CSOT facility is expected to start mass production in the fourth quarter of 2011 and be running at full capacity by December 2012. It has a monthly capacity of 100,000 glass substrates and an annual production capacity of some 14 million modules for 26-, 32-, 46- and 55-inch LCD televisions. The TFT-LCD panel is the most indispensable part of a television set’s display core, representing 40% of a TV’s cost. According to TCL’s CEO, Li Dong Sheng: “The inability to produce LCD panel has always been an obstacle in the progress of Chinese TV makers. It has affected the healthy growth of the Chinese TV industry.” CSOT fills the LCDpanel production gap in Shenzhen and South China. In a statement, a TCL spokesman added: “It is widely accepted that this project will help Chinese manufacturers to have a greater say in, and a larger share of, the LCD television market. It will play a positive role in improving China’s LCD TV industry, accelerate the building of a modern industrial system, and enhance China’s global competitiveness in the electronics industry.” In the past two to three years, Chinesebased manufacturers have been changing tack when it comes to international marketing plans. The proof of this paradigm shift becomes evident when one visits the various booths of Chinese companies at IFA 2011. An economic shift is under way, and IFA International has undertaken two indepth missions to China since the start of this year in an attempt to evaluate this change in attitude and marketing strategy. The first of our missions took place in April for the occasion of the Hong Kong and Canton trade shows. The second was in June, in order to confirm the impressions we had at the two trade events. One lesson learned is that major Chinese electronics manufacturers are increasingly visible on an international level, with, for the first time “brand managers” becoming apparent at their booths and out on the road. Indeed, until recently, Chinese companies were very much in a similar situation to that of Korean brands fifteen years ago and even Japanese brands 25 or 30 years ago. At those times, Japanese and Korean manufacturers were sometimes thought of as having little originality in their design capabilities, even occasionally accused of copying western design, and with a lesser quality. The evolution of production quality, firstly in Japan, and secondly in Korea, has been followed by public opinion that these brands generally mean “design and quality”. Chinese companies Chinese brands are increasingly exerting themselves in global CE markets. Lenovo is a perfect case at hand. meanwhile have largely contented themselves with manufacturing cheaper OEM/ODM products, working on low price points and high volume. Today this is changing. While China remains the “world factory”, in parallel to this, quality has now truly become the credo of manufacturers there (while still keeping volumes high). Products such as HTC smart phones and Lenovo laptops are proof of this paradigm change. In Lenovo’s most recent financial statement, this is reflected in the fact that the company has, for the seventh consecutive quarter, grown faster than any of the top five PC manufacturers, helping them to become the third largest PC vendor in total shipments. During their first financial quarter this year (from 1 st April), Lenovo’s worldwide PC shipments grew 23.1% year over year, while consolidated sales for the first fiscal quarter increased 15% year-overyear to a record of US.9 billion. In the field of white goods, China has, over the past few years, also been advancing in leaps and bounds. Haier is reported to be the number one brand worldwide in terms of sales of home appliance products. While this is largely due to massive sales in China itself, the company is very actively working to promote itself as a brand worldwide. In Europe, sales continue to increase, despite particularly tough competition from European quality brands such as Miele, AEG Electrolux, Bosch and Siemens. In 2010, Haier built what they call the “new European organisation”. “Haier was a company with a very strong industry power,” says René Aubertin, CEO of Haier Europe. “So Haier was producing a lot of products and they were being sold in a kind of ‘trading process’. Now we have changed the way we speak to the market, to address the product, and now we have people in the marketing department who are able to customise the best products for Europe.” This R&D prowess, based on market feedback, is echoed throughout a number of Chinese companies, including Huawei, TCL, Hisense and ZTE. In its own right, TCL is a market leader in the TV field in its home territory. Celebrating its 30 th anniversary this year, the Shenzhen-based manufacturing giant is officially opening, in October this year, its first Generation 8.5 TFT LCD manufacturing plant. This new manufacturing capability will give TCL full “vertical integration”, putting it in the same category as companies like Panasonic, Samsung and LG when it comes to production efficiency. In the following pages, we have gathered facts and thoughts from a number of top Chinese-based manufacturers that will enable the reader to gain a better understanding of just where these companies are coming from… and where they’re headed. While China remains the “world factory”, in parallel to this, quality has now truly become the credo of manufacturers there www.ifa-international.org IFA International • Saturday 3 rd & Sunday 4 th September 2011 19

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