Years ago, if you were to be a foreign brand in China, you will find that you can command a real brand premium over other “Made-In-China” products. The reasons are very simple. You probably have
• Better quality,
• Better performance,
• Better safety,
• Better reputation and trustworthiness etc.
Since most of the products (or hardware) in China cannot match with the above quality, it’s a no-brainer that the foreign brand can command higher prices, AND still sell like hot cakes.
However, things have changed drastically over these few years. Nowadays, wherever you are in the world, you can find “Made-in-China” products that have met:
• International quality standards,
• International performance standards,
• International safety standards, and
• Reasonable levels of reputation and trustworthiness
While some customers are still reeling from product safety such as the 2008 Chinese Milk Scandal, but even world-class manufacturers like Toyota have problems with their Foot Pedals. No matter how you look at it, Chinese products are indeed catching up fast.
Yet, despite rising costs in China, Chinese products are still priced very low. This low pricing has caused many international brands to lose a lot of businesses due to their higher prices. The impact on the Chinese companies isn’t that good either: many Chinese companies are suffering from negative profits, shortage of funds or cash flow issues because of the low prices they quote. As a result, it’s a lose-lose situation for all.