Ever heard of the phrase: "The race to the bottom?" This is commonly used when talking about the Chinese manufacturing economy, as the cut-throat nature of it dictates that the many manufacturers continually battle each other on price, slashing margins over and over in order to win those highly sought after foreign contracts. But for Chinese manufacturers who harbour aspirations of becoming a brand that's well-recognised abroad racing to the bottom in this way is a very risky strategy. While there is nothing wrong with providing affordable products, there are several very good reasons why to avoid competing on price. Keep reading part 1 of this blog as Oxygen 2.0 explores why the race to the bottom for Chinese manufacturers is a fool's errand and give you proof that other Chinese manufacturers have broken free of this and now compete directly for the premium end of the market with the global big boys...

1. o2-v2.com http://www.o2-v2.com/en/blog/becoming-a-brand-why-to-avoid-competing-on-price-makes-sense
Becoming A Brand? Why To Avoid Competing On Price Makes
Sense (Part 1)
Ever heard of the phrase: "The race to the bottom?"
This is commonly used when talking about the Chinese manufacturing economy, as the cut-throat nature of it dictates
that the many manufacturers continually battle each other on price, slashing margins over and over in order to win
those highly sought after foreign contracts.
But for Chinese manufacturers who harbour aspirations of becoming a brand that's well-recognised abroad racing to
the bottom in this way is a very risky strategy.
While there is nothing wrong with providing affordable products, there are several very good reasons why to avoid
competing on price.
Keep reading part 1 of this blog as Oxygen 2.0 explores why the race to the bottom for Chinese manufacturers is a
fool's errand and give you proof that other Chinese manufacturers have broken free of this and now compete directly
for the premium end of the market with the global big boys...
Look out for part 2 of this blog where we share several strategies with you to follow as you
learn why to avoid competing on price.
Chinese Brands Don't Need To Be Dirt Cheap. Here's The Proof.

2. The days when China was 'cheap' and a place where only low-quality, disposable goods were made are passing fast.
OK, foreign behemoths like WalMart still force their Asian suppliers to offer goods at the lowest possible price, but
that's for manufacturers of cheap tee shirts, socks, and everyday items found around the house.
Increasingly we can also see Chinese brands which offer mid-range, or even luxury priced goods too!
Don't believe me?
Premium Chinese White Goods
I'm sure you are starting to see brands that you don't recognise in your local department, or electronics stores.
Haier, Gree, HiTechSense, Konka, and TCL, are available worldwide and that's just to name a few.
One white good manufacturer who produces high-end products that take on Western brands is:
Midea
Consider the Midea HC767WE 20.8 Cuft 4 Door LED Refrigerator in stainless steel.
This refrigerator's retail price in the USA is US$1,899.99. A princely sum, and even more surprising given that Midea

3. is a Chinese white goods manufacturer from just outside of Guangzhou.
I don't know how much profit they make on each of these fridges, but as you can see it is of a very similar look, size,
and price to many of the well-known Western brands in the marketplace such as 'Electrolux,' 'GE,' 'Samsung,' 'Bosch,'
and 'Frigidaire.'
If Midea isn't competing on price, as the price of this model isn't all that different to any of the aformentioned brands,
then what are they competing on?
This model has many features with benefits to the customer:
$61 to run per year
Auto ice maker
Frost free
Moisture retaining
Degerming technology
Wide Shelves
Independently controlled variable temperature room inside
Large storage space
So Midea can create a premium refrigerator which is as good as its peers, and compete with them on features and
benefits instead. If a product is good enough to solve customers' problems, in this case finding the right premium
refrigerator with enough space,a stylish look, and features to help store more items for longer, then it doesn't matter
that it is 'Made In China.'
"Today's foreign customers can see beyond a flag, and will choose the products best-suited to
solving their problems regardless of the flag of its country."
Whereas Chinese brands perhaps haven't disrupted the luxury clothing space as yet, we now see them creeping into
luxury electricals, even those as commonplace as white goods.
Premium Chinese PCs
Another area where Chinese electronics are not necessarily 'the cheapest option' is PCs. Yes, you heard right!
Today there are still many cheap OEM consumer electronics coming out of China, but several companies have made
the step up to being international brands who offer their goods at premium quality which can easily compete with well-
established Western brands.
PC brand Lenovo is one of them...
Lenovo
As early as 7 or 8 years ago this was a brand which was virtually unknown in the West, but are now the 'largest PC
maker in the world' (Source: CNBC). Pretty impressive for a Chinese manufacturer.

4. They offer PCs and laptops of vastly differing specifications, but at the upper end of their range they certainly are not
competing on price.
On the contrary, many of their computers are cutting edge and priced as such.
The Lenovo Y70 Touch Gaming Laptop is a cutting edge gaming machine that more that holds its own against
Western brands:
This powerful machine has a premium look, premium price tag at US$1,499.99, and seriously high specifications:
Operating System:Windows 8.1 64-Bit
CPU:Intel Core i7-4710HQ 2.5 GHz
Screen:17.3"
Memory:16GB DDR3L
Storage:1 TB + 8 GB SSHD
Optical Drive:DVD+/-RW
Graphics Card:NVIDIA Geforce GTX 860M
Video Memory:4 GB GDDR5
Communication:Gigabit LAN and WLAN
Dimensions (W x D x H):16.65" x 11.44" x 1.02"
Weight:7.48 lbs.
CPU Type:Intel Core i7

5. CPU Speed:4710HQ (2.50GHz)
Number of Cores:Quad-core Processor
Whilst you may not be a PC gamer, you can see that this machine offers vastly higher specifications than the average
laptop that you and I use at home for surfing the web.
Its only purpose is to solve the problem: "I need a laptop that is powerful enough to play today's newest games, and
will be good for a few years."
Price is irrelevant when gaming, as you need the tech that will allow you to do it, and it doesn't come cheap. To
gamers this would be an excellent purchase regardless of its price tag and origin.
Premium Chinese Mobile Phones
It cannot be denied that the easy availability of cheap mobile phones in China still makes it the world leader at
producing affordable handsets. In electronics you often get what you pay for, and while affordable and accessible,
they may not be of the highest quality.
However there are certain companies who have consolidated their early success in China and the developing world,
and are now working hard on becoming reputable global phone brands.
Huawei
Take Huawei for instance.
Huawei is in fact a huge global telecommunications corporation, but many people will only know them for their mobile
phones.
One of its latest phones, this highly specified 'phablet' the Ascend Mate 7 is designed purely to be an iPhone 6+ killer:

6. This enormous Android smartphone has a lot to love, and it will set
you back US$699.99 too!
If Huawei is competing at the top end of the scale when it comes
to price, then it must have the features and quality to back it up:
LTE FDD Band 1/2/3/4/5/7/8/20/28 (Aphase) LTE TDD Band
40, 3G UMTS 850/900/1900/2100/AWS MHZ GSM
850/900/1800/1900 MHZ6"
FHD Screen,1080p (1920 x 1080), 368PPI 16M colors
Fingerprint Sensor, AndroidTM 4.4/HUAWEI Emotion UI 3.0
13 Mega pixel Camera ，1080p video recording/1080p video
playback；F2.0； 5 Mega pixel HD front Camera
CPU Hisilicon Kirin 925 4x1.8GHz + 4x1.3GHz + 1x230MHz,
RAM : 2 GB ROM : 16 GB
Aluminium body
This is a top-of-the-range 4G LTE smartphone with a larger
screen than the iPhone 6+ and is gunning directly for brands like
Samsung, Google Nexus, Apple, and LG who currently sit atop the
'phablet' pile.
According to many reviews it's as good a phone as the iPhone
6+ (Source: Phone Arena), and some suggest even better!
With an all-metal body and sky high specs you wouldn't initially
consider this to be a 'Chinese phone,' but Chinese it is and it won't
take much longer of producing handsets like this before brands
like Huawei are automatically considered a rival to the Apples of the world.
They Know Why To Avoid Competing On Price. Do You?
OK, so you may not be at the level of Huawei or Lenovo yet, but neither were they several years ago. If we're
planning on becoming a brand who is recognised globally like these Chinese 'big fish,' then we need to take a leaf out
of their books and start competing on benefits and features instead of just the lowest common denominator: Price.
If we only aim to be less expensive our brands will never escape from being known as cheap. Cheap is only good
when something is 'everyday,' such as toilet paper.
Cheap doesn't capture customers' imaginations, and won't help you become a well-known and respected global
brand.
It will however have you constantly battling to cut margins and lower prices even further in order to keep competing
with other cheap manufacturers all of whom arein a fight to the death for the basement part of the market.
Look out for part 2 of this blog where we share several strategies with you to follow as you
learn why to avoid competing on price.

7. Like this blog? If you're ready to take your brand global, try reading: THE BEST PRODUCT PACKAGING TIPS TO
HELP YOUR BRAND GO GLOBAL (1)
Branding for Chinese manufacturers is fraught with problems.
You may have a great understanding of the Chinese market, but breaking into the West and competing with its well-
known brands is a massive challenge.
So where do you turn for help?
If you're starting out on your journey to becoming a recognised brand in the West you'll need to do a lot of things
differently, but do you have the necessary time, experience, and staff to succeed with this project?
Oxygen 2.0 is a bilingual Chinese and English-speaking marketing team who have decades of experience in helping
Chinese manufacturers become brands and market themselves to the West effectively.
Click below to request a FREE website, branding, and marketing assessment where we will examine your
current situation and offer free advice which your business can use to improve its sales abroad: