The trend to outsource manufacturing to lower-cost countries made China a dominant industrial base. Many domestic and international businesses setup factories to produce, export, and sell goods to consumers around the world.
For decades, Chinese companies struggled to establish their brands and sales channels in the United States, Europe and other industrialized countries. Hence, they choose to rely solely on producing goods for global brands rather than sell under their own names. Exporting products and earning foreign currency became their focus.
Seeing this strategic advantage, global companies leveraged their strong brand names to tap into to one of the biggest consumer markets in the world by producing and selling products in China.
Surprisingly enough, notwithstanding strong competition, the homegrown Chinese giants dominated the Chinese domestic market for consumer electronics and domestic appliances. With strong encouragement by the Chinese government, these companies have carefully developed a strong brand presence in their own home country.
Foremost of these homegrown giants is the Haier Group, now the world’s fifth-largest maker of white goods. As Chinese consumerism has grown, Haier has prudently built a strong reputation for product innovation, value for money, manufacturing excellence, quality, and customer service.
Not satisfied with succeeding in the Chinese markets, the Haier Group and other homegrown Chinese giants made significant inroads into consumer markets in many developing countries in South-east Asia and the Far East.
After establishing their brands internationally, Haier and other Chinese giants have successfully extended their strong domestic brands in the home markets of their biggest global competitors, and very commonly, their OEM-customers. They are thus able to benefit immensely from the higher margins offered in western markets and not just be content with the lower margins that ensue from being just a low-cost offshore supplier.