The Hindu Business Line : Chinese products piggybacking on MNCs?

Chennai, May 17 It is only a matter of before someone coins the term ‘fast moving consumer durables’ (FMCDs), to refer to things like Anchor light switches and fan regulators, and Philips ‘Made in China’ energy saving CFLs. Or unbranded made in China padlocks which easily beat Godrej’s Navtal on quality and price (for one particular size/strength, the Chinese lock cost Rs 320 compared with Godrej’s Rs 400) and, judging by the way the locks are displayed and ‘pushed’, on retail margins as well.

The critical difference in the first case is that Anchor came out on top only after fighting a long, expensive and risky battle to weed out fakes and win and retain customer loyalty. China, on the other hand, won a quick victory because of the ‘co-branding’ of MNCs and ‘Made in China’ products.

But it is hard to see how this logic can be applied to padlocks. In this case, some other mechanism must be at work.

According to sources in Ritchie Street, the ‘electronics capital of Tamil Nadu’, branded ‘Made in China’ MNC products account for 80-90 per cent of total sales of branded computers, monitors, pen drives, (Intel) processors, mouses and keyboards.

Perhaps, because they are able to piggy back on this, almost all of the thousands of unbranded USB extension cables sold on Ritchie street everyday, at about Rs 30 a piece, are also ‘Made in China’. Indian-made cables are of a poorer quality, said a trader; besides each of them costs Rs 40. Then, why would anyone buy the Indian product? The answer was “no one does”.

Apart from padlocks and USB cables, unbranded ‘Made in China’ products have managed to capture a large, often dominant, share of the market for a wide array of FMCDs, including bathroom slippers, toys, children’s garments, measuring tapes, nail clippers, and writing pens.

But what really takes the cake is the buzz in trade circles about the recent surge in the sale of unbranded upper-end Chinese mobiles. Walking into a shop on Ritchie Street with a large placard announcing the availability of ‘Chinese mobiles’, this reporter was shown a ‘Suny Ericssun’ I 8166 model priced at Rs 3,500 and another E 90 model (not a Suny Ericssun) priced at Rs 6,500.

The former mobile had MP3/MP4, and a camera; the use of which would cost an additional Rs 450 for a 2 GB memory chip. E 90 was additionally equipped with speakers, GPRS and the ability to send and receive e-mails. Unfortunately, none of these features could be verified from the packaging, the wording on which was entirely in Chinese; with the exception of the tiny ‘Suny Ericssun’.

Highly unimpressive, the whole thing, including the quality of the sales talk. Yet, incredibly, the word on the street is that though it is still too early to arrive at firm conclusions about prospects, mobile shops on Ritchie Street are doing a brisk business in Chinese mobiles, because you can buy for Rs 2,700 an unbranded Chinese equivalent of a warrantied Nokia model costing Rs 12,000.

What about quality differences? A couple of computer vendors on Ritchie street (the shops on which are tightly segmented across product categories such as computers, mobiles, dish TV, VCDs) believe that there are no significant differences between the Nokia and Chinese mobiles, either in the quality of the product - or in the quality of anyway-notional ‘after sales services’! Did the general public, too, think so? “Why else would so many of them be buying?”.

The only sticking point was that buyers of Chinese mobiles would not get a bill. Why should they care? Well, they might not, but the sales tax people have serious problems with it.

Whether unbilled (or billed) versions of unbranded Chinese mobiles will stay the course is an open question. But in the case of the other unbranded FMCDs cited above, ‘Made in China’ products have bagged a quick, decisive victory.