Reborn Industrial Tycoon

Chapter 426 I want the whole market!

Korean companies have long coveted the Chinese market. However, China and South Korea only established diplomatic relations in 1992, and it was only after 1992 that Korean companies had the opportunity to enter the Chinese market.

It's just that Korean companies at that time, like Japanese companies, only regarded China as a base for goods dumping. What they wanted was to sell goods to China instead of setting up production bases in China.

It was not until later that China granted more and more preferential policies to foreign investment, and foreign-invested enterprises received super-national treatment in China, that Korean companies began to enter China in large numbers and set up production bases.

However, when the super-national treatment of foreign capital was gradually abolished, Korean companies were the first to move away. One after another, Korean companies sold their assets in China, and their products quickly lost their competitiveness and were replaced by Chinese brands.

replaced.

Korean companies are very arrogant when it comes to the Chinese market. Korean companies have always treated the Chinese market differently. The best products are often not sold in China; Chinese consumers are not treated equally in terms of after-sales service.

.

Perhaps in the strategy of Korean companies, they have never planned to take root in the Chinese market and only want to make a fortune by taking advantage of the opportunities brought by China's rapid development.

Who would have known that China's development is getting faster and faster, and it has not stagnated. Korean companies' arrogant strategy towards the Chinese market has also caused Korean brands to be eliminated by the Chinese market one after another.

Among South Korea's major chaebols, the first to invest and set up factories in China was the LG Group.

LG Group's strategy originally favored overseas investment. As early as the late 1980s, LG Group began to set up production bases around the world.

Countries such as Italy and the United Kingdom in Europe, Mexico in Africa, Egypt in Africa, and Thailand, Philippines and Indonesia in Southeast Asia all have LG production bases.

It is also because LG is keen on localizing production in various countries, so during the Asian financial crisis in 1997, LG Group was relatively less affected by the Korean chaebol.

The distance between China and South Korea is so close, and China has such a broad market, LG will not ignore China, so after the establishment of diplomatic relations between China and South Korea, LG plans to set up a production base in China.

The first thing LG wants to produce in China is naturally home appliances, and microwave ovens are the breakthrough point chosen by LG.

In the mid-1990s, China's home appliance market had become a sea of ​​​​blood, and it was difficult for foreign home appliance brands to get a share of the cake in the Chinese market.

What's more, in the field of major appliances, LG's advantage is not huge.

LG really took the cake in China's home appliance market when TVs entered the era of LCD screens. A few years before LCD TVs first appeared, LG almost monopolized the entire LCD panel industry with its leading technology and huge production capacity in LCD panels.

.

At that time, LG not only sold its own LCD TVs and monitors, domestic TV manufacturers also had to purchase LCD panels from LG to produce TV sets.

But within a few years, with the rise of domestically produced LCD panels, the big pie of LCD panels was eventually taken away by companies such as BOE. LCD TVs that were expensive back then were sold at bargain prices by Chinese companies.

In the mid-1990s, picture tube TVs were still used. Picture tubes were a mature technology and had no potential to be tapped. LG had no technical advantage in this regard.

For other home appliances such as refrigerators and air conditioners, LG cannot compete with Japanese brands.

If Chinese people want to buy an imported air conditioner, they will definitely choose Mitsubishi or Hitachi instead of LG. If they buy domestic brands such as Chunlan and Gree, they also use compressors imported from Japan. The quality is also good and the price is more advantageous.

.

After a series of market surveys, LG finally gave up on major appliances and chose to produce microwave ovens in China.

In China in the 1990s, microwave ovens were still a new household appliance, and before the microwave oven price war in 1996, the price of microwave ovens was relatively high and the profits were very large.

At that time, although there were more than a thousand microwave oven manufacturers in China, there were only a few manufacturers that had mastered the core technology of microwave ovens. Most of them could only import core components and assemble them.

Even manufacturers that can master the core production technology of microwave ovens have relatively average technical standards.

LG's microwave oven technology is relatively mature and convenient for home use. LG's microwave ovens are no worse than Japanese brands such as Panasonic and Hitachi.

This is also the reason why LG dares to set up a microwave oven factory in China.

LG located its microwave oven factory in Jinmen instead of the Jiaodong Peninsula, which is closer to South Korea. Firstly, it was because in the mid-1990s, the economic development of the Jiaodong Peninsula was not as good as that of Tianjin, and various supporting facilities were not complete; secondly,

Because Jinmen, as a municipality directly under the Central Government, has more developed policies, the policy preferences enjoyed by LG are much greater than those in the Jiaodong Peninsula.

Later, when the policies of the Jiaodong Peninsula became more developed, LG built its mobile phone factory in the Jiaodong Peninsula.

…

The marketing department of Puppy Electric is located in Shanghai, not Qinghe.

In a small place like Qinghe, it is advantageous to build a factory and engage in production. After all, the labor cost is relatively low. But it is not possible to build a R&D center or a marketing center.

In addition to being located in big cities, R&D centers can also follow universities and use their resources to conduct R&D.

The marketing center must be located in big cities such as Beijing, Shanghai, Guangzhou and Shenzhen. In big cities, information dissemination is more convenient and rapid, and the market reaction can be grasped at the first time.

After Zhong Yemao became the marketing director of Puppy Electric, he quickly recruited people and established a marketing planning team for Puppy Electric.

In the conference room, Zhong Yemao informed Li Weidong of the information he had collected.

Zhong Yemao gave a general introduction to the situation: "Mr. Li, I have a classmate who works in the propaganda department of Jinmen City. He revealed the news to me, saying that South Korea's LG Group plans to build a microwave oven factory in Jinmen with a total investment of

The amount is 100 million, which is still US dollars, and the annual production capacity is expected to exceed 2 million units!

Now the two parties have reached an agreement and will sign a contract soon. My classmate doesn’t know the specific details of LG’s investment in setting up a factory, but the press release from the Tianjin Propaganda Department has been written and is waiting for the signing to be completed directly.

News!"

"With 100 million U.S. dollars, how can the annual output be only 2 million units? Even if we start from scratch, we can still reach a production capacity of 5 million units. If we invest 100 million U.S. dollars in Puppy Electric, we can achieve 1,000 units.

Production capacity of 10,000 units!" Li Weidong said.

"I don't know much about this aspect, and I don't know much about production matters, but what my classmate told me is indeed this number." Zhong Yemao explained.

Li Weidong said: "This shows that the Koreans' 100 million U.S. dollars are reasonable. It is estimated that their actual investment amount is not that large. They deliberately mentioned a larger amount in order to get a good preferential policy! Koreans

As unreasonable as ever!

However, the production capacity of 2 million units is not a small number. No domestic microwave oven manufacturer can reach this figure. The goal I have set for Puppy Electric is to reach an annual production capacity of 2 million units next year. Now it seems

You have to go in advance.”

"Mr. Li, how should we respond?" Zhong Yemao then asked: "You said on the phone that you want to play a big game and drive LG out of the Chinese market. Is it true?"

"Of course it's true." Li Weidong nodded and continued, "Ye Mao, you fight this battle, and I will provide you with bullets."

"No problem!" Zhong Yemao nodded without hesitation, and then asked: "Mr. Li, how much ammunition are you going to give me this time? Is it one million? If there is one million, go to CCTV and do a few

If the advertisement can be promoted nationwide, our microwave oven will definitely become a household name."

Li Weidong smiled slightly: "Don't worry, listen to me. This time our marketing strategy is mainly to reduce prices, supplemented by publicity."

"Reducing the price? Doesn't that lead to a price war?" Zhong Yemao was slightly startled.

Li Weidong nodded, and then held out three fingers: "Yes, this time I am going to fight a price war. This year I will reduce the price of microwave ovens by 30%. Within three years, I will reduce the price of microwave ovens to less than 1,000 yuan!"

"

Upon hearing this price reduction, Zhong Yemao suddenly took a breath of air.

At that time, the domestic cheap microwave ovens on the market cost more than 2,000 yuan, while imported brands cost 3,000 to 4,000 yuan. If the price dropped to less than 1,000 yuan within three years, it would not only be cut in half, it would be cut in the thigh.

root!

"Mr. Li, actually I don't recommend price war. From a marketing perspective, price war is not a good marketing method. Although it can quickly seize the market, it will reduce the company's profits." Zhong Yemao said.

Li Weidong replied: "The reason why I plan to use price war is mainly because the price of microwave ovens is not reasonable now. A microwave oven costing two to three thousand yuan is really too expensive. At such a high price, it is difficult to buy in big cities."

There are quite a lot of people there. In third- and fourth-tier cities, only the rich can afford it!

For microwave ovens, there is a lot of room for price reduction. I am not afraid to tell you that even if the price of each microwave oven drops to 1,000 yuan, we can still make a profit. Moreover, with the improvement of production technology and the increase in output,

The production cost of microwave ovens will gradually decrease.

Therefore, I believe that reducing the price of microwave ovens will happen sooner or later. Even if we don't do it, other companies will do it. If we wait until other companies launch a price war, then we will become a passive party. Instead of doing that, we should actively seek a war.

Let us launch this price war and seize the initiative in our hands!"

Zhong Yemao nodded, and then said: "I just think that a 30% price reduction for an LG microwave oven is a bit too high. Should I reduce it a little less, starting from 10%?"

"If we don't reduce prices by 30%, I'm afraid we won't be able to scare away foreign companies like LG." Li Weidong continued: "And what I have to deal with this time is not only foreign brands like LG, but also domestic microwave oven companies.

Nowadays, there are more than a thousand companies producing microwave ovens in China, and the quality of their products varies, but their core components, namely magnetrons, are basically imported from Japan. Imported components are definitely expensive.

We at Puppy Electric have mastered magnetron technology. In this regard, our costs are lower than other domestic companies, so I plan to use our technical advantages to take advantage of this price war opportunity to give the domestic microwave oven industry a try.

A complete shuffle!

Domestic microwave oven companies will most likely not be able to withstand this kind of price war. I estimate that when we reduce the price to less than 1,000 yuan, there will not be more than 100 domestic microwave oven companies that can survive. Even if they survive

For enterprises, profits will be very low.

As for foreign brands, not only South Korea’s LG, but also several Japanese home appliance brands, as well as those from Europe and the United States who want to get a share of the pie, will all be driven out of the Chinese market in the face of price wars!”

Zhong Yemao finally understood Li Weidong's intentions. He confirmed softly: "Mr. Li, do you plan to defeat other microwave oven manufacturers and monopolize the entire Chinese microwave oven market through price war?"

Li Weidong shook his head, and then said: "Ye Mao, you underestimate me. What I want is not a Chinese market, but a global microwave oven market! One day in the future, I will make microwave ovens as cheap as cabbage, and they will be sold all over the world.

All brands of home appliances have to come to me to make microwave ovens!”

…

Historically, LG's microwave oven factory also suffered from bad luck and bad luck.

After the completion of LG's microwave oven factory, it planned to expand its ambitions in the Chinese market, but Galanz launched the first round of price war for microwave ovens. The price of domestic microwave ovens dropped all the way, and finally it was sold to less than 1,000 yuan.

Faced with an unethical price butcher like Galanz, a newcomer like LG who has just entered the Chinese market is naturally unable to resist, so LG's first shot at microwave ovens in the Chinese market was a misfire.

Two years later, the price war in the Chinese microwave oven market stopped. However, the Asian financial crisis hit South Korea again. The Korean economy almost collapsed. LG was forced to shrink its business, and its microwave oven business in China could only stagnate.

It only took South Korea more than three years to get out of the impact of the Asian financial crisis, which is considered a very good performance among the countries that suffered from the Asian financial crisis.

LG, which had regained its composure, also planned to expand its ambitions and continue to develop its microwave oven business in China. However, at this time, the second round of price war for Chinese microwave ovens began.

Midea acquired the microwave oven business of Nishiba Electric in Japan, giving them the capital to compete with Galanz. Of course, Galanz would not sit still and decisively launched another price war.

At this time, Galanz and Midea are no longer small shrimps, and this wave of price wars is also extremely fierce.

As a result, what was originally a fight between Galanz and Midea turned out to be a disaster, and the microwave oven plan of LG microwave ovens had to be shelved again.

And this stranding never floated again.

Later, LG discovered that it was more profitable to sell mobile phones and LCD panels in China, so it focused its business on mobile phones and LCD panels. The microwave oven project was put aside.

Although LG's microwave oven factory in Jinmen eventually started operating normally, the Chinese microwave oven market was no longer available to LG.

Overall, LG’s microwave oven factory in Tianjin was a failed investment. Although the project still made money, it did not achieve LG’s strategic goal of entering the Chinese market.

Now, in the world where Li Weidong is reborn, he plans to launch a price war in advance and directly drive LG out of the Chinese market!

The update was delivered today, and I overslept as soon as the weekend came. Thank you all parents for subscribing. Please give me a guaranteed monthly pass. Thank you for passing!