Professional Documents
Culture Documents
In the history of development for private businesses in China, Galanz is a brand that cannot be forgotten among the Chinese brands in the world market. Galanz is the first company in China that has positioned itself as a Global Manufacturing Facility. Mr. Leung Chiuyin, president of Galanz believes that the biggest advantage of Made in China is due to the low cost of labor and Galanz has the advantage of low cost as this is mainly based on the low cost of labor and production scale for this company. This company has grown from a small township factory that employed seven or eight workers into a large company that employs over 40,000 employees. Its products in the world cover over 50% market share and it has become a real champion in China. It is worthwhile to study and introduce the legendary history and creative spirit of Galanz. The year 1992 has historical significance to Galanz. In this year, Galanz seized a historical opportunity with its insight and changed from the manufacture of textile products to the manufacture of household electric appliances. The transition of the manufacturing center in the world has brought unprecedented space for development to the manufacturing industry in China. In 1978, China was at the initial stage of economic development and the opening-up and reform of the state brought a great number of opportunities to the development of economy. On September 28 in this same year, a small township factory with seven or eight employees was established in Shunde, Guangdong province. This factory was the predecessor of Galanz which was engaged in manufacturing water washed down feathers with goose feathers, duck feathers and chicken feathers. This small township factory struggled for survival with hard work and it later changed to the compensation trade mode of OEM processing textile products for companies in Hong Kong and for the state-owned foreign trade companies in China. The fact has proved that Galanz is correct in its judgment. Depending on this advantage, Galanz trial produced 10,000 units of microwave ovens in 1993 and it increased the production volume to 100,000 units in the following year. In the third year, it produced 200,000 units of microwave ovens and became No. 1 in China due to its 25.1% market share. In the year 2007, the production and sale of microwave ovens exceeded 25 million units. 1998 was the first year for Galanz to initiate internationalization which was to become No. 1 in the production and sale of microwave ovens. The export volume in that year achieved US$ 100 million. In 2000, its market share of microwave ovens in the world reached 30%. In 2001, the production and sales of microwave ovens for Galanz around the world reached 10 million units. In 2005, the production and sales of microwave ovens for Galanz around the world reached 21,130,000 units with the market share being 50%. In 2006, the production and sales of microwave ovens for Galanz around the world reached 23,700,000 units. In 2007, the production and sales of microwave ovens for Galanz around the world reached 25,830,000 and its market share in Europe exceeded 50%. Its market share in South America and Africa exceeded 70%. Galanz has maintained the No. 1 sales of microwave ovens in the world for consecutive ten years and its fame as a Famous China Brand is known around the world.
Galanz | 1
Galanz was able to produce goods with a substantially lower cost. The choice of employing OEM method was proven to be a crucial success factor. By using OEM, Galanz went into the global market inexpensively by avoiding the costs associated with promoting its brand and establishing a distribution network. It also enabled the company to use the OEM partners manufacturing equipment to produce its own branded products to be sold in the domestic market. These advantages are the key reason why Galanz was able to exceed other Chinese manufacturers. Having established itself as a major player in the global market, Galanz now has more resources and expertise to search even further in the international level. OEM microwaves oven were the Primary exports without any brand recognition to the end users. The technical capability of Galanz was established through investment in R & D and learning through importing the most advanced technologies allowed to reduce costs and provide differentiation. The company transformed from OEM to ODM (original design manufacturing) after the production of magnetrons by themselves. Having conquered the domestic market, Galanz reached into the global market through the OEM (Original Equipment Manufacturer) method in 1998. OEM is proven to be a swift method of tapping into the global market for Galanz, while the other parties benefit from getting low manufacturing costs without having to set up their own operations in China. Recently, Galanz has been starting to promote its own independent brand. This shows a change in Galanz internationalization strategy, switching focus into getting consumer to recognize Galanz as an independent brand. Aside from its success in the microwave market, Galanz has been trying to expand its product portfolio, introducing other household appliances from then on. The company currently has 13 subsidiaries, 52 sales offices in China and branches in Hong Kong, Seoul and North America.
Galanz |
Recommendation
Based on above analysis below are some recommendations to overcome current challenges faced by Galanz and develop strategy to continue its future business growth. Galanz should develop its OBM business in the international market because of the competition among the MNCs i.e. increasing demand for the branded products. Not only this, Galanzs products were very cheaper but with good quality. The goods were exported, the end consumer even liked the product due to its quality but they had no idea about its brand name, so, to explore the users about its brand, Galanz should develop its OBM business. I think the company may not grow if it is continues OEM and ODM business because OEM products were replaced by OBM products because of brand consciousness in the users. ODM would not be useful to develop due to short product life cycle. The company should focus on cost leadership and enter in the international market i.e. follow the strategy same as of Toyota. Toyota entered into the US market by focusing on the cost leadership. Later on when it established its market then it introduced the premium products. Develop customized production/assembly in developed markets and for developed markets. Continue major investments in innovation in technology and production Invest resources in customer resources planning. Implement efficient production planning systems by maintaining inventory level regarding to demand forecasting Develop strong service networks and distribution channel
Galanz | 5