Chinese Household Appliances Businesses Are Entering South Korean Markets At A Rapid Rate

Chinese household appliances are coming into Korean distribution markets.

Chinese household appliances’ sales during ‘Korea Black Friday’, which had occurred in early October, had increased 18 times compared to last year just from online shopping malls. Including Xiaomi, Chinese household appliances businesses such as Romoss, Yunmai, and 360 are entering South Korean markets by reducing prices in half.
According to industries, ‘Made in China’s effect in South Korean household appliances markets are becoming bigger.

As ‘excellent performance compared to prices’ strategy is working in South Korean markets, number of Chinese brands and products are increasing and a controversy about Chinese products’ qualities is let up as well.

Komatrade, which specializes in distribution, had held a new launching event for Chinese household appliances. Not only Xiaomi, but Romoss’s supplementary battery, Yunmai’s Smart Scale, and 360’s Smart Cam were released for the first time in South Korea.

Romoss’s battery is a product that once reached number 1 in sales volume in China. Smart Scale is a product that measures 8 body data such as weight, fat, muscle volume, basal metabolic rate and others. Chinese Smart Cam acts as a role of a security camera at home by connecting itself with Smartphones.

Another distributor called Artiazen is selling Xiaomi’s tablet at $221 (250,000 KRW) starting from the 26th. It had already received official certification from South Korea and supports Korean background. Lenovo, which is a number 1 in laptop sales in South Korea, recently had released ‘Pablet 311 (Phone + Tablet)’ at $352.65 (399,000 KRW).

Fever about Chinese household appliances is even crazier in online shopping malls. Sales of Chinese household appliances during Black Friday, which was held from the 1st to 14th of this month, had increased 1733% compared to last year (auction standard).

This shows that popularity of Chinese household appliances is very high. Even in product lines, they’ve surpassed Smartphone accessories and expanded to scale, air purifier, fan, wearable equipment, drone 352 and others.

Lotte Hi-Mart and Etland that are centered on offline markets are also showing much interest towards Chinese products. They are at a point where they can increase sales of Chinese household appliances at any time if they can secure customers’ preferences.

Xiaomi’s TV and water purifier are going through a process of certification so that they can be sold in South Korea. This indicates that Chinese household appliances businesses’ offensive is expanding towards large-sized household appliances.

Number of products that were made by Chinese manufacturers with just South Korean brands can be increased hereafter as well. Smartphone ‘LUNA’, which is made by China’s Foxcon and sold by TG N Company, is a prime example of this.

◇ Eyes of news: Chinese products with excellent performance compared to prices are predicting sudden change in South Korea’s distribution markets
Chinese household appliances’ offensive is predicting a sudden change in all of South Korea’s household appliances manufacturers and distribution industries.

First of all there is a great worry that it will shrink South Korean medium and small-sized manufacturers. Although this can broaden customers’ options, medium and small-sized businesses, which had been focusing on niche markets by avoiding South Korea’s big companies, have to compete against new competitors.

Until couple years ago, Chinese household appliances were considered as cheap and of low quality. However a trend is now leaning towards ‘excellent performance compared to price’, and South Korea’s medium and small-sized businesses will have hard time in suppressing China’s small-sized household appliances businesses that are equipped with mass-production and cheap price.

Samsung Electronics and LG Electronics also need to prepare against Chinese businesses. Effect of Chinese products such as expensive TV, refrigerator, washing machine and others is not too much so far, and Chinese businesses are slow in entering Smartphone markets as well.

However medium and large-sized household appliances such as Xiaomi’s TV and water purifier are approaching South Korean markets shortly, and there are number of people who are saying that they will purchase Chinese household appliances as soon as they are released. South Korea’s big companies need to overcome negative awareness that they had made unreasonable profits until now.

“Chinese products, which do not have much difference in performance by using global major products that are standardized, are coming into South Korean markets at a discounted price.” said one person in household appliances industries. 

It is also interesting to see how distribution businesses will react against this. Distribution businesses are thinking Chinese household appliances as a new opportunity because they can increase brand that they deal with while growing bargaining purchasing power and customers’ touch points. There are definite differences in point of views from South Korean manufacturers and distributors.

Some are pointing out that a measure to protect South Korea’s household appliances industries is urgently needed. Government is creating a basis by utilizing Samsung and LG’s household appliances platforms so that medium and small-sized manufacturers can have new convergent products with competitive edge.

Government is pretty much telling these businesses to raise entry barrier by creating variety of convergent services in Smart Home 411 along with Samsung and LG because they now have hard time competing against Chinese businesses with just current products and utilization methods.

“Instead of competing in prices, medium and small-sized businesses with weak brand power need to find a new breakthrough through premium household appliances with IoT80 and converged and mixed technologies.” said a person from Korea Electronics Association.
Senior Reporter Kim, Seungkyu | [email protected]