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The vast potential of the market for microwave ovens, which used to be dominated by Guangdong-based Galanz and South Korean LG, is attracting more and more manufacturers.
A survey conducted by the Development Research Centre of the State Council shows the current popularization rate of microwave ovens is 47.6 per cent in the country's large and middle cities, but in the vast rural areas, the figure barely reaches 1 per cent.
In developed countries, the rate already exceeds 80 per cent, said Lu Renbo, senior analyst with the centre, adding that the renewal period of the product is five years, which is quite a short period of time, compared with other kinds of household electrical appliances, such as TV sets and refrigerators.
Such vast market potential has attracted more than 30 microwave oven producers to "grab a piece of the cake."
Midea, which started producing microwave ovens in 1999, had seized 9.5 per cent of the market share by the end of 2001, joining the country's top three in the sector.
Before, the third place was occupied by South Korean brand Samsung.
According to statistics from the China Household Electrical Appliances Association, in the first four months of the year, Galanz led the market with a share of 56 per cent, with LG following next with 23 per cent.
US brand Whirlpool announced in April it would move its two microwave oven product lines from Sweden to Shunde, a city in Guangdong Province, and increase investment by US$6 million to expand its annual production volume in Shunde from 1.3 million sets to 2 million sets.
Japan-based National has decided to set up its global production base in Shanghai and promotes a microwave oven model selling only for 398 yuan (US$48), the lowest price among joint venture brands.
Such aggressive measures from competitors are adding pressure on leader Galanz, but are unlikely to affect the giant's dominance in the near term.
After waves of price wars initiated by Galanz and aimed at eliminating uncompetitive microwave oven manufacturers, the Guangdong-based giant is now focusing on technological renovations.
Yu Yaochang, vice-general manager of Galanz Group, told Business Weekly the company invested more than 400 million yuan (US$48.2 million) in the research and development (R&D) of new products last year. It also has set up a R&D centre in the United States and has invited US experts to join the research, he said.
"We promote a new type using both microwave and light-wave to heat up food, which may largely increase the heating efficiency while keeping the food's nutrition," Yu said.
In the growing competition, many microwave manufacturers have also expanded their product offerings. Midea has introduced a microwave oven with frequency conversion and Haier is promoting one equipped with a barbecue function. Depending on the type of model, prices vary from 300 yuan (US$36.1) to 2,000 yuan (US$241.0).
A salesman at Beijing Guomei Electrical Appliance Shopping Centre said high-end microwave ovens sell well despite the high prices.
Many families are replacing their old microwave ovens, and they often opt for more high-tech products, he said.
"But for those young couples or unmarried youths, they prefer to buy cheaper ones as their first microwave oven," the salesman said.
Besides finding popularity at home, Chinese-made microwave ovens also sell well in international markets.
Microwave ovens are exported more than other household electrical appliances, said Chen Gang, vice-secretary-general of the China Household Electrical Appliances Association.
"China has already mastered the core technology of the production of microwave ovens, and the country can provide all relevant fittings. With low labour costs and mass manufacturing, Chinese-made microwave ovens are competitive in the global market," said Chen.
Galanz Group exported 5.5 million ovens to the United States and European countries last year, which accounted for more than half of its total production volume, which holds a global market share of 35 per cent, Lu said.
(Business Weekly July 10, 2002)
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