China Corner
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German, Eastern European Customers Remain Ambivalent about 'Made in China'
Source: By Tim Shen | Date: 02/12/2009
 

It is no secret that Germans are some of the toughest customers in the world when it comes to quality. Another characteristic is that they are often slow to adopt new technologies. All of this is bad news to Chinese electronic security manufacturers, which find to their dismay that most Germans prefer to go with tried and true names like Bosch and Siemens. Markets in Eastern Europe, most say, are proving more promising. That said, few intend to give up on Germany entirely.


One of the biggest problems that Chinese companies face in penetrating European markets, particularly Germany's, is the presence of old, well-established brands that possess top customers and technical service facilities. Given the long history of these companies, legacy products and systems present another formidable barrier.


Oliver Zhang, Europe Department Manager of the International Business Center at Hikvision, pointed to Bosch and Siemens as two of the strongest. "There are already too many big names in Germany. Certainly, Siemens and Bosch and the biggest," said Zhang. "These companies have top-level standards that make them a particularly hard act to follow, especially for smaller, younger Chinese companies."


If that were not bad enough, German customers are renowned for their conservative approaches to building relationships and their reluctance to go for the latest technology. "German users are more conservative," said Zhang. "The majority prefers to stick with the tried and true."


Most other Chinese manufacturers agreed, observing that this is one of the reasons why the German market contributes so little to their European revenue. "Everything in Germany is more professional," said Hwang
Zhongyuan, CEO of SOEST. "Customers, here, demand very high standards regardless of whether for design, structure or manufacturing. "That is why Poland and Turkey are much bigger markets for us."


"We are doing much better in East Europe, which is our biggest market in Europe," said Michael Chen, Overseas Market Director at Dahua Technology Co. Ltd. "We are doing especially well in Poland, Romania and Hungary; sales in Germany are still relatively limited."


"While 80 percent of our sales are now coming from overseas," said Hector Wang, General Manager of IR LAB, "most of this is going to East Europe, not Germany."


Alec Weingart, CEO and President of Actiontop Electronics, also sees greater potential in East Europe, including Romania, Croatia, Latvia and Lithuania. "Generally speaking," he said, "East Europe is more open to Asian products than Germany."


Financial Crisis, Global Recession
While most customers tend to look at the product, it is also important to scrutinize the company from its management to operations. This is doubly important as the current economic crisis snowballs, leading to more and more bankruptcies.


"The financial crisis," said Weingart, "has consumers much more conservative than before about purchasing electronic security products or system upgrades. They are also much more cautious about who they choose to work with. This may limit the opportunities for many Asian manufacturers, especially those from China."


Having a strong financial background, stressed Weingart, is the key to stay alive. He also recommended that international buyers select companies with good channel partners. "I have my own criteria of partner at the following four points: First, your partner must offer strong technical support to provide local backup and after-sales service; second, your partners need to have a strong financial background; third, they must have comprehensive sales and distribution channels in local markets; finally, looking for a partner with a lot of stamina."


Weingart's final advice to new Chinese electronic security players is to slow down. "This is a good time for them to review their operations. They may wish to reshuffle their management, look at fostering greater efficiency in administration and operations, and examine how to better integrate their resources. This will eventually prove most useful in convincing skeptical German customers that they will be around for the long haul."


Telling the Truth, the Whole Truth and Nothing but the Truth...
Having attended the Essen electronic security exhibition twice in a row, Weingart has a deep understanding of how Chinese products are viewed by most German customers. Weingart has been working in the electronic security industry for more than two decades; he has also spent the last 10 years in China.


"I hate to say it, but many of these Chinese players lie," said Weingart, "and that is definitely harming the Made in China reputation."


Several of Weingart's German customers told him that Chinese providers send samples, claiming that they are from their factory in China when, in reality, they are from someone else's factory or from a facility in an entirely different country. "You can imagine," he said, "that this does not do much for building trust in the relationship when they get caught in these lies."


While he bemoans this unprofessional behavior by a large percentage of Chinese companies, there are still several manufacturers with sterling reputations, such as Hikvision, Actiontop, Sunell, Dali, TVT, Coship and others.


For example, Hikvision has developed an enviable research and development base in Hangzhou with more than 300 engineers, which has made Hikvision become currently No. 1 when it comes to revenue among all Chinese suppliers.


Then there is Coship, which has the same number of engineers as Hikvision. The company also has an R&D institute to share and integrate all resources and achievements within the organization. So, clearly, there are a number of reputable Chinese companies and most international buyers understand this. That said, the old warning, caveat emptor, or let the buyer beware, should be in the back of every customer's mind, not just those in Germany.


 

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