Bloomberg BusinessWeek, Jan 13, 2014 (I)

choi

(1) Sam Grobart, My Fridge Is Smarter Than Yours.
www.businessweek.com/articles/20 ... iance-maker-by-2015

Quote:

“The technology industry hums with disruptive new companies that enter the market by taking share away from others or creating markets of their own. But kitchen appliances? The brands that dominate the field today—Whirlpool, General Electric, Kenmore—are the same names we’ve known for decades. Samsung Electronics plans to upend that.

“It’s [Samsung’s] already the fastest-growing appliance brand in the US, having jumped from 2.3 percent in market share to more than 10.5 percent over the last five years. ‘We’re on track,’ says BK Yoon, Samsung’s co-chief executive officer in charge of consumer products such as TVs and appliances. But grabbing the top spot from appliance leader Whirlpool won’t be so easy. Samsung’s appliance-related revenue totals roughly $12 billion a year; Whirlpool took in almost $18 billion in 2012. (Whirlpool declined to comment.) In the US especially, ‘Samsung has a way to go,’ says Eric Voyer, a vice president and former appliance-industry analyst at the Stevenson Co, a market research firm.

“The company’s high-end refrigerator has a target price of $6,000, almost 50 percent more than the most expensive Kenmore model. Currently, Samsung’s average price for an appliance is $1,046 in the US, according to the Stevenson Co. The industry average is $702. For Samsung to become the world leader in appliances, it will have to broaden its appeal with cheaper models, says Bob Baird, vice president for appliance merchandising at Home Depot. ‘Right now they’re a premium brand, but you can’t be No 1 without capturing the core of the market,’ says Baird, whose company began selling Samsung products at the end of 2012.

“One area in which Samsung may have an edge is consumer recognition that extends beyond appliances. The company’s success in TVs and mobile devices means that far more people are familiar with Samsung than ever before. In 2012, Samsung spent $29 million on US appliance advertising, according to data from Kantar Media, which tracks ad spending. That’s less than the $33 million appliance archrival LG Electronics spent on home goods, and a lot less than the $54 million spent by Whirlpool. Zoom out [and look at the bigger picture of Samsung’s US advertising budget all ALL brands, including cellphones], though, and Samsung’s advertising dwarfs that of the other appliance makers: In 2012 the company spent $600 million on ads overall.


Note:
(a) summary underneath the title in print: Samsung aims to dominate the appliance business by 2015

(b)
(i) Kenmore Appliances
en.wikipedia.org/wiki/Kenmore_Appliances
(a Sears brand)
(ii) For Kenmore history, see
Still Renovative After All These Years; Celebrating Kenmore Brand's 100th year of renovation. Kenmore, undated
www.kenmore.com/innovationtimeline/nb-120000000301791
("1913  The name 'Kenmore' makes its debut on sewing machines")

(c) For US market share of household appliances, see
James R Hagerty and Min-jeong Lee, Samsung's Phones Help Sell Home Appliances; Reputation and advertising of trendy devices boost refrigerators and washers in US. Wall Street Journal, Aug 6, 2013
online.wsj.com/news/articles/SB10001424127887323664204578609892263756014

View only the bar chart whose heading is:
Korean Surge[:] US market share, in dollar terms, for major home appliances
(2Q08: Whirlpool > GE> Electrolux > LG > Samsung; 2Q13: Whirlpool > GE> LG> Samsung > Electrolux)
(d) When the Economist lavished praise on Haier a few month back, I scratched my head. I do not know Haier’s corporate culture, but OUTSIDE China: it is not well known, highly regarded; sales not among the top rankings.

(e) Beyond China: Can a New Acquisition Help Haier Crack Japan? Knowledge@Wharton, Nov 9, 2011.
knowledge.wharton.upenn.edu/article/beyond-china-can-a-new-acquisition-help-haier-crack-japan/

Quote:

“It's not often that loss-making companies are enticing acquisition targets. But there is good reason why Haier Group has just shelled out 10 billion yen (US$132 million) for Japan’s Sanyo Electric, a company that's been in the red since 2005.

“Although Haier reigns as an appliance-making juggernaut at home in China, growth abroad has been tough. * * * But being big in China is one thing; being big globally is another. Haier is the world’s largest refrigerator manufacturer and the second-largest manufacturer of washing machines by volume, but that's largely due to an enormous home market, which accounts for most of the company's sales.

“Can Haier succeed where many have failed? Consider computer maker Lenovo. Similar to Haier, Lenovo wanted to become a global player. Buying a well-established foreign brand appeared to be the fastest route to that goal. But after Lenovo purchased IBM's worldwide PC business in 2004, the American firm lost market share in Japan. To regain ground, Lenovo then bought 51%of NEC’s computer business earlier this year.

“Wharton management professor Saikat Chaudhuri notes that although Haier has not been able to break into the Japanese market, they're not the only ones.  "American firms have also had a hard time penetrating that market," he says. A case in point: GE, which had only 0.5% market share in refrigerators in Japan in 2010, according to London-based Euromonitor International. Euromonitor reported that by 2010, Haier had only a 0.2% share of Japan's major electric appliances market, with sales totaling 10 billion yen [despite Haier’s efforts: “Haier's arrival in Japan. In 2002, it set up a sales unit in Osaka in western Japan, and formed a joint venture with Sanyo to market Haier’s white goods in the country].

“Haier's share in Japan's washing machine market is currently close to zero, and will be around 15% thanks to Sanyo, says Cristina Baus, a Euromonitor consumer applianceanalyst. Panasonic led the market in 2010 at 34.9%

“Korean and Chinese manufacturers have made the mistake of relying on product designs that imitate their Japanese rivals rather than being innovative, says [Tomoo] MARUKAWA 丸川 知雄 of Tokyo University.

*Jim Breen’s online Japanese-English dictionary:
* tomo 友(P); 朋 【とも】 (n): “friend”
or * tomo 共 【とも】 (n): "together with <両国とも今は平和な状態にある。 Both countries are now at peace>"
* o  雄; 男; 夫; 牡 【お】 (n): "male [as in animals]; man"

(The “oo” in the given name is NOT a long vowel of “o.”)

choi

(2) Roben Farzad, Dr Doom’s Upbeat Prognosis.
www.businessweek.com/articles/20 ... acteristically-rosy

four consecutive paragraphs:

“The contrarian [Roubini], who stayed bearish for most of the recovery, is optimistic about US markets * * * Emerging markets aren’t looking half bad either * * * That forecast is in line with International Monetary Fund estimates, suggesting that the outlier economist is reverting to the mean. Roubini declined to be interviewed for this story.

“His predictions have been less on target since he warned on his blog in early 2007 that ‘the party will soon be over.’ At the World Economic Forum in Davos, Switzerland, in January 2009, he said, ‘I’ll be the first to call a recovery, but I just don’t see it yet, and it’s getting uglier.’ He got that one wrong: The US emerged from recession that June.

“Roubini was off the mark again last March, when he forecast a market correction in the second half of 2013. There wasn’t one, and the Standard & Poor’s 500-stock index registered a 30 percent return for the year. In June, as investors were fretting about the timing of the Fed’s stimulus taper, he warned in Institutional Investor magazine that the US central bank’s exit would be ‘treacherous’ and would foment financial instability. He tempered that dire warning three months later, when he said the US would close 2013 in a better position than most developed economies, leading to a stronger dollar and a soft landing for bonds. So far it looks like his second prognostication was right.

“‘History tells us to avoid the future forecasts of any seer who lands a major outlier,’ says wealth manager Barry Ritholtz, a Bloomberg View columnist.’Subsequent predictions tend to be even worse than the crowd’s. There are a slew of one-trick ponies out there.’ Elaine Garzarelli, then of Shearson Lehman Brothers, predicted the stock market crash of 1987 and subsequently faded from the limelight. Analyst Meredith Whitney got it right in 2007 when she anticipated that losses on toxic mortgages would force Citigroup to cut its dividend, yet the municipal bond apocalypse she warned about in a 60 Minutes interview in 2010 hasn’t come to pass.


Note:
(a) summary underneath the title in print: Nouriel Roubini’s forecast for 2014 are uncharacteristically rosy
(b) The moral is never believe a fortune-teller in Far East (or a psychic in US). I never consult one. Back in College in Taiwan, I had a classmate who older brother one day had hurried through 新公園 (roughly equivalent to Central Park in Manhattan). A fortune-teller hollered, “Stop and talk to me. Or you will not live beyond 25.” His brother was then 30 something. I asked, “What did your brother say?”  “Nothing, walk right by.”
(c) I am not saying economists are fortune-tellers. Still economics is “the dismal science.”
(d) The last paragraph of the Roubini article:

“In his latest turnabout, the normally grim Roubini hasn’t completely gone over to the bright side. ‘Some emerging markets,’ he wrote in his Dec 31 piece, ‘will remain fragile in 2014, owing to large external and fiscal deficits, slowing growth, below-target inflation, and election-related political tensions.’ And while Roubini discounts the likelihood of a hard landing in China this year, he thinks medium-term prospects for the world’s No. 2 economy are ‘worrisome.’

Nouriel Roubini, Slow Growth and Short Tails. Project Syndicate, Dec 31, 2013
www.project-syndicate.org/commen ... shock-will-diminish
(“Finally, China will maintain an annual growth rate above 7% in 2014. But, despite the reforms set out by the Third Plenum of the Communist Party’s Central Committee, the shift in China’s growth model from fixed investment toward private consumption will occur too slowly. Many vested interests, including local governments and state-owned enterprises, are resisting change; a huge volume of private and public debt will go sour; and the country’s leadership is divided on how quickly reforms should be implemented. So, while China will avoid a hard landing in 2014, its medium-term prospects remain worrisome. * * * China’s uncertain efforts at economic rebalancing”)

Basically that was all he had to say about China in 2014, which is not particular salient.