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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 21

China Business Intelligence No. 21

Samsung Economic Research Institute Beijing Office

Feb. 26, 2007

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Highlights

I. Technological Convergence Materializes in China

  • China's state-run National Development and Reform Commission published a circular approving Haier's digital standard (QBT2836-2006) for home appliances. The new standard will take effect starting from August 1, 2007.
  • Overall, electronic manufacturers that attempt to improve their competitive position through limiting consumer choice (in the form of mandatory standards) will face numerous long-term obstacles. Foremost, limiting consumer choice will also limit the products manufacturers can provide as technological functions converge. In order to satisfy a wider range of consumer needs, the selected platform must be open to innovation. For example, a cellular phone that uses open software systems such as Symbian, Windows and Linux will continue to develop because they don't limit potential improvements.

II. Multinational Dairy Firms Change China Formula

  • Dairy ventures by multinational corporations (MNC) have had little success gaining traction in China. Multinational dairy and food companies began to enter China in 1979 independently or through joint ventures and by 2002, most of the world's top 20 dairy brands had entered the Chinese market.
  • The dairy-specific MNCs are expected to follow the path of other MNCs, who expanded their control of joint-capital firms on a gradual basis. The investments represent a win-win for both the MNCs and Chinese companies. MNCs gain access to the mature marketing networks of Chinese dairy companies to expand market share and leverage international branding as local tastes are cultivated. At the same time, local dairy product companies are relieved of spending much on marketing.
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