How Kelon and Haier innovated to attract the local Chinese market

In the 1990s, so many multi-national companies award technology leaders went into Chinese market. In white goods sector, world demand was largely saturated. However, demand in China is rising. Japanese products such as a washing machine, microwave ovens, entered China very early on while Western company were still contemplate whether the Chinese consumers could afford them. In 1994, American giant, Whirlpool, went to China and established four joint ventures to produce a whole range of products. At the same time, it established its Regional Product Design Centre in Singapore. Now, you can imagine how confident the company was. This, of course, added to the threats faced by local companies to avoid head-on competition. Most local companies changed their strategies leaving foreign companies to fight for the premium markets in cities on themselves focusing on the vast, untapped, rural market. Many only saw the rural market as the low-end market demanding, for example, cheaper and low quality products. Foreign giants did not even lay eyes on it. In reality, the priority of demands of individual markets differ significantly. If you really want to know, the rural users in China then did not care too much about the appearance of the product design and the finish of the product quality. Instead, they gave the priority to the reliability of the product, because the repairs services could be difficult for them to gain access to. In this case, farmers bought washing machines and not only used it for washing clothes, but also for washing other things such as potatoes. When the local Chinese companies heard of the farmers complaints about problems of the blocked drainage with the washing machines, a company like Kelon and Haier soon developed washing machines with improved drainage design that could be used to clean potatoes as well as clothes. As a result, they really outperformed world leaders like Whirlpool. The Chinese company is higher now as the number one in the white goods market.