Threatening Korean Manufacturers
As China’s largest appliance maker Haier Group is buying General Electric Co.'s appliance unit, Korean competitors – Samsung Electronics and LG Electronics – are keeping a close watch on how the decision will change the industry in the future.
According to industry sources on Jan. 17, domestic consumer electronics companies expect that Haier will start tightening Korean companies in earnest with the takeover of GE’s appliance unit.
Previously, Samsung Electronics has become the biggest competitor in the semiconductor sector to be pursued by China’s Tsinghua Unigroup after the company tried to take over a number of global semiconductor firms last year. Tsinghua Unigroup indirectly acquired SanDisk, the world’s fourth biggest NAND flash memory maker, and failed to take over a 15 percent stake in SK Hynix last year, beefing up China’s semiconductor industry.
In addition, Haier’s acquisition of GE’s appliance unit is expected to change the world’s white goods market.
Earlier, Sweden’s Electrolux, the second largest home appliance maker in the world, announced to acquire GE’s appliance unit at US$3.3 billion (4.01 trillion won) in 2014, but the deal fell apart after United States Justice Department sued to block it because of antitrust concerns. The Chinese appliances company, the No. 1 company in the global white goods market with sales of US$32.6 billion (39.61 trillion won) in 2014, was able to snap up the appliances unit since it had a smaller market share than Electrolux in the U.S.
Samsung Electronics and LG Electronics, which ranked third and fourth among worldwide manufacturers of household appliances, are worried about the long-term effects, rather than the short-term effects, of Haier’s acquisition.
An industry official said, “Haier is the largest home appliance market in the world. However, its domestic demand ratio is high and it focuses on low price strategy. In addition, GE has low global competitiveness, except for the North American market. Accordingly, the latest takeover is less likely to change the market in a short period of time. However, it is clear that Haier will eventually improve the competitiveness in the premium home appliance market by making use of GE’s global brand power and technology.”