Chinese firms are waging price wars. The consumer isn’t always winning
A store in a shopping center in Beijing on August 7, 2024.
Pedro Pardo | AFP | Getty Images
The violent price battles in China squeezes the profits from cars to food delivery, solar panels, and worsen the country’s deflationist slide. Although consumers can be withdrawn by ultra-beap agreements, it is more complex than they appear for them.
In the midst of pandemi and ongoing housing collapse, Chinese consumers became more sensitive, focused on value, and reduced non -required expenditures. In order to remain competitive, automobile manufacturers have deepened a year -long price war, to the aid of state subsidies – upright discounts and cut prices.
Instant trade sector, Alibaba– Jd.com And Meituan They compete to expand their delivery networks and promise billions of subsidies and convince their customers with opportunities such as bubble tea for cents.
It is not difficult to see the appeal of the trend for some consumers.
Li Kun, a resident in Beijing XPENGA salesperson said he was connected immediately after he called him about new subsidies.
Li said, “The harder the producers, the better for buyers.” He said. “Race as you want!”
However, the timing of a purchase process may feel like a gambling if prices fall later, the inhabitants of Beijing Yu Peng plans to raise his car. “As a consumer, the only thing you can do is to quietly accept.” Nevertheless, Chinese says: “Buy early, enjoy early.”
Hidden costs
The fierce competition comes with hidden costs.
Some buyers in China, automobile manufacturers when the corners cut to stay cheap safety and quality may suffer, recall and low scores said problems with the problems with assisted driving features.. And since Beijing is now concerned about wages, tax revenues and entire economy, as price wars do not only harm companies and suppliers.
In recent weeks, China’s state media has increased the criticism of price wars. This month, Qiushi, a Chinese Communist Party publication, warned that the lower race could force the companies to reduce the basic production cost and compromise on quality, and “cause bad money to come out well and ultimately damage consumer interests”. The comment also hit some local governments for offering unfair incentives.
On Wednesday, China’s cabinet promised to organize a “irrational” competition by directing tight controls on costs and prices and from being cheaper about who has better technology and caliber.
Analysts say that the preservation of market share for now is a priority for many car manufacturers.
Felipe Munoz, an automotive analyst in JATO, does not want to lose its market share in the saturated market with many brands and similar models, and the only way to survive in the short term is that the prices are reduced.
Chinese Iswedar Carmaker Lynk & Co Sales Manager Jim Ma said that the company focuses on loyalty, not short -term snow, but on time. The new Plug-in hybrid has a mini refrigerator, rotating seats and a LED message strip. The competition has made buyers more sensitive for price, but certain designs such as value safety, customer support or in -car entertainment for children.
“Our pricing policy is to make and choose customers like our brand.” He said. “In the long run, we hope that they will still choose us when they need after -sales services or decide to change or take a new car.”
Fluctuation effect
The fluctuation effects of China’s pricing wars are also felt abroad – in various ways.
Some consumers other than China welcomed the tremor that forces car manufacturers to offer better products globally.
Julia Polisanova, Senior Director of Lawyers and Environmental Vehicles, said Chinese houses help to fill the gap left by slow -moving European brands. Although it is not as cheap as it is in China in Europe, the prices are still slightly lower or they offer better range or software at the same price.
However, politics comes into play as tariffs and minimum pricing in Europe, China and Houses. A key question is how Japanese and Korean brands will encourage localization of supply chains in Europe to localize domestic industries, just as Japanese and Korean brands did decades. In some Chinese companies, efforts for Europe’s small automobile market continue.
Poliscanova said that although consumers in Europe often attach more importance than a car manufacturer’s origin, they are more concerned about wider economic effects.
“They just want to make sure that this does not result in the loss of work, for example, neighbors or someone in a nearby village.” He said.
