[Column] 'Copycat' China's Premium Home Appliance Invasion

At Italy's 'Milano Design Week,' it was Chinese home appliances, rather than Samsung or LG, that caught the reporters' eyes. Chinese Haier showcased AI home appliances with technological capabilities so advanced that one could believe they were products from global companies like Samsung Electronics. They also exhibited products not found in domestic companies' lineups, captivating visitors. Watching the Haier booth, which was packed without any space to step, Han Jong-hee, Vice Chairman and Head of Samsung Electronics' DX Division, expressed concern, saying, "We need to be cautious."

The rise of China in the European built-in appliance market holds special significance. Unlike the saturated general home appliance market, built-in appliances are mainly composed of package products, offering high potential. Compared to general home appliances, profitability is much higher, making it an area where global companies are aggressively entering. Europe is considered the birthplace of the built-in market, accounting for 42% globally, making it the most important region.

For non-European brands, the entry barriers to the European built-in appliance market are quite high. However, the Chinese market has achieved rapid results through enhanced technological capabilities and aggressive mergers and acquisitions (M&A). On-site, Haier set up the exhibition hall of the Italian smart kitchen brand Candy, which it acquired to expand market influence, right next to the Haier booth, keeping visitors engaged.

Ryu Jae-cheol, President of LG Electronics' H&A Business Division, who also visited the exhibition, said, "Our number one competitor we need to pay the most attention to is Chinese companies, especially Haier," adding, "They are employing many of the successful formulas we used in the past."

The calculations of the domestic home appliance industry have become complicated. The strategy to maximize operating profit through a premium approach based on technological prowess has become ineffective in front of Chinese home appliance companies. At CES, the world's largest IT show held earlier this year in Las Vegas, China’s TCL surprised the world by exhibiting a larger 115-inch 'Quantum Dot MiniLED' TV than those of Samsung Electronics and LG Electronics. The situation has reached a point where companies must even consider re-entering the low-cost, entry-level market to block China's offensive.

The success formula of Chinese companies, which grew as copycats, is no different from ours in the past. Samsung and LG also grew through imitation before becoming market leaders. China is following that path. It is difficult to be a leader because one must find an unseen path. Milano Design Week was a time when creative ideas, such as collaboration between different industries, became desperately needed.