Image source @ Visual China
Wen | Huashang Taoluo, author | Liu Baicheng
In the early 1980s, young men talked about marriage, and the "three major pieces" of bicycles, sewing machines, and quartz watches were best complete. A few years later, the three major pieces became televisions, washing machines and refrigerators.
In the "new three major pieces", the most top-notch is the foreign brand. Toshiba and Samsung's TV sets, Sanyo and Hitachi's refrigerators, Siemens, Panasonic's washing machines...
But unconsciously, these famous foreign brands are no longer the preferred choice of consumers.
From unlimited scenery to becoming memories, how did foreign home appliance brands lose China's three major stages?
01
The entry of foreign brands was once an important symbol of China's reform and opening up process.
On October 28, 1978, in Ibaraki City, Japan, although it was drizzling, the 83-year-old Matsushita Konosuke led hundreds of workers to wait outside the factory gate.
As several black cars slowly stopped, Deng Xiaoping's figure finally appeared.
Subsequently, under the guidance of Matsushita Konosuke and others, Deng Xiaoping walked into the Ibaraki factory of Panasonic Company to visit.
In the factory exhibition hall, Deng Xiaoping saw Panasonic's most advanced dual-screen television sets, high-speed fax machines, Chinese character arrangement devices, video recorders, microwave ovens and other products at that time. When the steaming roasted wheat came out of the microwave, Deng Xiaoping unexpectedly picked it up and said, "It tastes good." ”
Years later, Matsushita Konosuke still remembers this scene vividly: "The enthusiasm of The Chinese leadership for achieving modernization, the humble and realistic attitude, and the flexibility of handling problems are touching." ”
After the visit, Deng Xiaoping said to Matsushita Konosuke: "Mr. Matsushita, can you do some help for China's modernization construction?" Deeply moved, Matsushita Konosuke immediately promised: "Willing to give everything to me and do my best to help." ”
Deng Xiaoping inscribed on the factory commemorative book "Sino-Japanese Friendship, Bright Future"
In June of the following year, Matsushita Konosuke was invited to visit China for the first time, becoming the first well-known international entrepreneur to visit New China. When talking about the development of the electronics industry, Panasonic Konosuke was deeply touched and proposed a grand plan: led by Panasonic, together with Japanese electrical and electronic companies, to jointly help China's industrial reform.
After returning to Japan, Matsushita Konosuke actively met with Japanese electronics industry giants, frequently gave media interviews, and constantly introduced China's reform and opening up policies. However, due to the lack of understanding of China's China at that time by the Japanese electronics business community shortly after the establishment of diplomatic relations, coupled with the fierce competition between enterprises and the difficulty of coordination, Panasonic Konosuke's appeal was not widely responded to.
Deng Xiaoping met with Matsushita Konosuke, who was visiting China for the first time
In 1980, Matsushita Konosuke visited China again, apologized to Deng Xiaoping in person, and proposed that Panasonic was willing to cooperate with China alone and set up a model joint venture as an example. This became the source of Beijing Panasonic Color Picture Tube Co., Ltd.
Two years later, Matsushita Konosuke was seriously ill and bedridden, and he insisted on calling his subordinates to inquire about the construction of the Beijing factory. When he saw the photos of the factory that was about to be completed, Mr. Panasonic, who was extremely weak, had a satisfied smile on his face.
On April 27, 1989, Konosuke Matsushita passed away. Three months later, the Beijing factory was officially completed and put into operation, and Panasonic Konosuke was not able to witness the factory that he had in mind, but fortunately the factory finally lived up to expectations and made a remarkable mark in the history of Panasonic and China.
This factory was the largest Sino-Japanese joint venture at that time, Beijing Panasonic Color Picture Tube Co., Ltd., which was officially put into operation in 1989 and achieved profitability in less than a year, sensationalizing the entire industry, so enterprises from all over the world came to China to invest and build factories.
The other side of success is that Chinese love for foreign national power brands begins. Excellent craftsmanship, strict quality control, and excellent design in product appearance have made Panasonic's color TV harvested a lot of results as soon as it was listed. At its peak, Panasonic once occupied nearly 20% of China's color TV market share.
Encouraged by Panasonic, Sony, Toshiba and Sanyo have followed up the Chinese market. Subsequently, South Korea's Samsung, LG and other home appliance companies have also entered China.
With the implementation of the Foreign Investment Management Regulations, foreign home appliance brands have increased their investment in China, and their China business was once the fastest growing and most profitable sector under the group.
At that time, China's home appliance industry, local enterprises just started. In this sense, it is not an exaggeration to say that foreign brands have completed the education and enlightenment of Chinese consumers.
Therefore, foreign home appliance brands that have completed their enlightenment will naturally become the favorite choice of consumers. Throughout the 1990s, foreign home appliance brands spent a golden decade in the Chinese market.
But that doesn't mean the good times will go on forever, and a group of opponents who are determined to challenge are gritting their teeth in places that foreign brands can't see.
02
On March 26, 1996, at the counter of a mall in Chengdu, a middle-aged man wearing a red ribbon shouted loudly in the crowd and sold television sets.
This person is Ni Runfeng, the head of Sichuan Changhong.
After more than ten years of development, a number of local home appliance companies such as Changhong, TCL and Konka actually have considerable manufacturing capabilities, but due to the lack of core technology and insufficient brand power, they have always been in the inferior position in the competition with international brands, and the color TV market at this time is in turmoil because of the impact of the smuggling trend.
According to the statistics of the state department of commerce, in 1995, only 549,000 foreign color TVs came in through the normal channels of foreign trade, but the actual sales volume on the market was 5 million units.
In the autumn of that year, the government announced that it would reduce import tariffs on color television from 35.9% to 23% on April 1, 1996. Multinational companies are so excited that Japan's Panasonic put down its harsh words, "at the expense of 3 billion US dollars to occupy the absolute share of China's color TV market", and set the goal of "beating a company and squeezing out an industry".
Of course, foreign-funded home appliance companies have such confidence, after all, even Changhong's first color TV assembly line was imported from Panasonic, while foreign-funded home appliance companies mastered a large number of core technologies.
Under the background of policy expectations and reality, domestic color TV sales continue to be sluggish. As the boss of domestic color TVs, Changhong's inventory color TVs have reached 1 million units, with a total value of more than 2 billion yuan, to the point where "it is too late to build warehouses every month" to stack.
This made Ni Runfeng feel uneasy, and after several thoughts, he thought of a tactic: reducing prices, using price advantages, to spell out the brand advantages of opponents.
At that time, the price difference between Changhong and international brands was not too big, a 29-inch imported color TV price was about 10,000 yuan, Changhong was more than 8,000 yuan, 25-inch imported color TV price was more than 6,000 yuan, and Changhong was more than 5,000 yuan. Ni Runfeng believes that in order to "spell out" the brand advantage of the opponent, domestic color TVs should be at least 30% cheaper, "this is a decisive line."
However, Changhong's gross profit margin at that time was about 25%, and once the price was reduced by 30%, it was unprofitable. But Ni Runfeng is obviously determined, on the one hand, he strictly ordered the company to rely on management to tap potential, on the other hand, cleverly carried out a combination of price reductions, and the color TVs with the largest price reduction range are the products that account for the largest number of libraries and have been unsalable for many years.
A thrilling price war began.
On the brochure of Changhong Color TV, there is such a sentence: "We have all the functions that foreign products have; we have all the varieties that foreign products have; we provide services provided by foreign products; but under the same function and the same quality, our prices are 30% lower than foreign countries."
Three months later, Konka color TV followed up with the price reduction and joined the warband, TCL then launched the "Embrace Spring" big concession activity, panda and other companies have also launched price reduction activities. The price war affected 150 large shopping malls in 61 large and medium-sized cities across the country, making profits as high as 18%-30%.
After this battle, by the end of 1996, China's color TV industry underwent a major reshuffle, and more than 60 domestic television companies have since disappeared from people's vision. However, local brands rose to 71.1% of the market share, and foreign home appliance companies suffered the first blow in China's color TV market.
However, the price war alone cannot really replace the position of foreign brands in the Chinese market, for example, the high-end home appliance business is still in the hands of foreign home appliance companies. The price war can help local home appliance companies win market share, but it is difficult to win a reputation for high quality.
Therefore, taking foreign brands as a teacher is still the only way out for local home appliance competition.
Just as Changhong Company also introduced the production line of Panasonic Electric Appliance Company, so it has the capital of the future World War I, the learning and cooperation of the core technology of foreign home appliance companies is still the main path of China's home appliance companies.
Midea, which has now become the number one home appliance company in China, has gradually risen through the study of Toshiba.
In 1985, midea's air-conditioning equipment factory was officially established, but in the following years, the factory had a problem: it could not solve the problem of mass production of air conditioners.
As the founder of Midea, although He Xiangjian attached importance to technology, it was difficult to introduce high-tech talents to join Midea because of the limitations of corporate attractiveness at that time. For a long time, Midea has been relying on the way of "digging the corners of state-owned enterprises" and "secretly doing it", and using a large number of "Sunday engineers" and "night technicians" to make up for the lack of technology.
Such a method is difficult to continue to form research and development capabilities, in 1991, Midea broke the past practice, through the purchase of Toshiba injection molding machine, Toshiba air conditioning mold, while xu with heavy money in the whole society open recruitment of talents, with a strong learning ability, Midea quickly designed, produced a number of well-made air conditioning products, and finally achieved immediate results.
Taking this transaction as a starting point and combing through the history of the United States, we can clearly find a "Toshiba Technical Trail".
On May 8, 1993, midea and Toshiba held the signing ceremony of the first technical cooperation at the China Hotel in Guangzhou. In the subsequent publicity, Midea's air conditioner played two technical cooperation products, and soon gained a good reputation in the market.
In 1999, in order to open up the second battlefield, Midea set up a project to develop commercial air conditioning system technology, however, the air conditioner developed by Midea had technical defects, and in desperation, it had to turn to Toshiba again.
Toshiba sent technicians to Midea to provide technical guidance as the chief engineer of the project, and the success of the project soon helped Midea to open up a new business growth curve, making the company's profits grow rapidly.
Even in 2011, Midea is already in the era of competing with Gree, and following The pace of Toshiba is still an important part of Midea's work.
That year, after the current chairman Fang Hongbo agreed on a core technology cooperation agreement with Toshiba, Li Qiang, the head of frequency conversion technology, placed a Piece of Toshiba chip in front of Fang Hongbo and told him that this was the core technology chip.
Fang Hongbo carefully studied for half a day, his expression became very serious, and at the same time told Li Qiang: "To learn the spirit of Japanese craftsmen, immerse yourself in research, one year will not learn for two years, two years will not work for three years, the old fire will cook beautiful soup, and thoroughly master the core technology."
This became the source of Midea's famous "one-night electricity" air conditioning technology.
Compared with the loss of share, under the guidance of "old fire boiling beautiful soup" and "craftsman spirit", the teeth of the latecomers are chasing after the teeth, which is the most frightening fact for the leaders.
03
In the home appliance market from 1998 to 2008, almost all local brands regarded foreign brands as the biggest challenge object, and in the past decade, the price war has been continuous, and the technology catch-up has emerged in an endless stream. With the expansion of the market, the capital in the hands of local brands is becoming increasingly strong, which is enough to launch direct competition with foreign enterprises in various product areas.
On July 10, 2009, the China Digital Television Industry Development Summit Forum was held in Qingdao. Dalian Toshiba TV director and general manager Kawakami Kinhisa suddenly jumped out of a sentence in an interview - Toshiba has done a very hard job this year.
Since March of the previous year, Toshiba's digital TV all-in-one products have far less than the company's expectations, and even if this expectation is already the target of the planning headquarters.
Under pressure, in November 2009, Toshiba lowered its tone again, and Kawakami announced that in 2010, "Toshiba could maintain a 20% share of foreign TV brands sold in the Chinese market."
The implication is that Toshiba has been unable to compete with domestic home appliance companies, and can only hope for the high-end market that has always been in control.
Such a phenomenon does not only appear in Toshiba, nor does it only appear in the field of television.
As early as 2007, in the refrigerator industry, the overall market share of foreign brands shrank across the board, and the market share of foreign brands such as Panasonic, Hitachi, LG, Samsung, Sharp, and Sanyo was less than 15%, and the sum of sales share was less than 19%.
Five years later, the game between domestic home appliance brands and foreign home appliance brands has become more intense, and even many home appliance observers have been surprised to find that those local brands that were regarded as "dirty, poor and low-end" in the past are gradually forcing foreign home appliance brands into a corner.
Samsung, which has always been the hegemon of global television, is in an awkward position in the Chinese home appliance market. In the four years from 2014 to 2017, Samsung TV's sales share in the online market was 3.48%, down 1.49% year-on-year, ranking 10th in the industry; the sales market share of the offline market was 8.7%, down 1.25% year-on-year, ranking 6th in the industry.
In the washing machine category, Whirlpool's retail share in the offline market in October 2018 was only 1.9%, ranking last in the TOP10. Refrigerators, once regarded as Siemens' fist products, saw a 1.29% year-on-year decline in sales share.
Behind the decline in sales is the successive losses of foreign home appliance brands, which makes the glimmer of hope in the eyes of foreign home appliance brands about to disappear.
Ten years ago, Toshiba's Dalian factory was in good operating condition, with workers working in three shifts and treatment comparable to that of local state-owned enterprises.
But this was the last glory, and soon, as the market pattern deteriorated rapidly, the factory had to lay off workers in batches, and the shift changed from three shifts to two shifts. Just two years later, Toshiba's treatment is no longer attractive to Dalian's young people.
The decline in the market is only the tip of the iceberg, after the group as a whole suffered a financial report scandal, battery recall and other blows, the unsustainable Toshiba finally embarked on the road of selling property.
On March 17, 2016, Midea announced that it would acquire a controlling stake in Toshiba's white goods business through an acquisition, and in June of the same year, Midea acquired an 80.1% stake in Toshiba's white goods business for RMB3.32 billion.
At the business banquet to negotiate the acquisition with Toshiba, Fang Hongbo, who was already the chairman of midea, mentioned the past: when he first entered the company as the editor of "Midea Newspaper", he clearly remembered the excitement of Midea when he signed the first technical cooperation contract with Toshiba.
At that time, Toshiba was still the object of study and cooperation of the United States, and in the blink of an eye, the guests and hosts were transposed, and things were not people.
But this is not the endgame, in February 2018, Toshiba sold a 95% stake in Toshiba's TV business to Hisense. At this point, after 143 years, international-level multinational companies have gradually withdrawn from the stage of history.
The same wave of acquisitions is happening everywhere, with foreign home appliance brands that once flocked to China.
In 2014, Hefei Sanyo, founded on March 22, 1994, was acquired by Whirlpool and renamed Whirlpool (China).
In whirlpool's view at that time, Hefei Sanyo was originally a leading enterprise based on China's home appliance market, with a complete range of washing machines, refrigerators and microwave ovens and production lines. Whirlpool's acquisition of Hefei Sanyo is to learn from each other's strengths and complement each other's shortcomings and follow the trend.
Unfortunately, Whirlpool also overestimated its own energy in the Chinese market, and the acquired business has become a burden on operating performance. In 2019, Whirlpool lost 323 million yuan and in 2020 lost 150 million yuan.
Under the tide, Whirlpool did not escape the fate of being acquired. In April 2021, Galanz President Liang Zhaoxian announced the acquisition of Whirlpool, and Galanz has since become the fifth largest comprehensive home appliance giant in China after Haier, Midea, Gree and Hisense.
In the field of high-end products, the technological advantages of foreign home appliance companies are gradually fading. Transformation has become the last common choice.
Compared with local color TV manufacturers such as Changhong and Konka, Sony's technical advantages in traditional home appliances have almost disappeared, and now they can only focus on digital products such as cameras, headphones, and game consoles in the Chinese market. Philips accelerated its transformation into a healthcare service provider after selling its home appliance business. In 2019, its healthcare revenue accounted for 66% of its main business revenue.
The price of this transformation is to retreat to the new growth curve cultivated by itself in the past, and to get stuck in some areas where the market is not large, but has not yet been broken. The collapse of foreign brands in the home appliance market has made the classic home appliance brands of that year almost disappear.
The process of foreign home appliances gradually slipping from the peak is also the process of China's home appliance industry chain branching out and continuously improving. In contrast, the profitability of local enterprises such as Haier Group, Midea Group, Gree Electric Appliances, and Hisense Group has continued to increase. In the first three quarters of 2021, Midea Group's net profit was 23.455 billion yuan, and even if it was hit by the epidemic, it still achieved positive year-on-year growth of 6.53%.
In just over thirty years, foreign home appliance brands have come and gone in a hurry, from unlimited scenery to the memories of a generation. What kind of enlightenment does this bring us?
First, we must not ignore the effect of the advantage of the substitute in the large consumer market, and the second is not to fall into the trap of making cars behind closed doors.
The first point, I am afraid, is an eternal reincarnation. New entrants will always take advantage of the easing of competition, increase investment in research and development, carry the banner of oligarchy, and let cross-era terminal products lead the innovation of the industrial chain.
For the second point, we also need to soberly realize that as one of the largest industrial products of mankind, from the refrigerator color TV that we can see and touch, to the upstream scientific research, technology transformation, and manufacturing process of the industrial chain, any link may have a breakthrough revolution, and it is almost impossible to maintain technological leadership in all links, and it is also an extremely dangerous thing.
The advantage of the Chinese market lies in the consumption scale supported by the population base, which has created the success of local home appliance brands, but it is also a dividend that everyone can share.
Foreign-funded home appliance brands, there have been a very high historical position, overlooked, led, brilliant, but also declined, for China's current home appliance brands, it has a strong sample value. Only by facing history squarely and being willing to take it as a warning can we have the possibility of evergreen karma.
In this regard, China's home appliance giants still have to innovate and struggle endlessly.