The Research On Competitive Strategy Of ETK Small Domestic Appliances Business

Since the 1990s, China has gradually become one of the world’s attentions in the manufacturing world. Many outputs of industrial products are among the highest in the world. It becomes after the United Kingdom, Germany, USA, Japan, another "world factory." Based on China’s export-oriented economy, China emerged a large number of export-oriented OEM/ODM companies. These companies get huge profits and completed the initial capital accumulation. They made an incredible contribution to the rapid development of China’s economy and also played a pivotal role for China to become the world’s second largest economy.ETK was founded in 1997. It is a typical OEM/ODM manufacturing enterprise, mainly engaged in the product design and manufacturing of electric kettle, toaster and other small domestic appliances. The products are mainly exported to Europe and other developed markets. When the Chinese demographic dividend advantage is fading away, the increasing appreciation of the RMB and as well as European economies in trouble, the wrestling between Chinese small appliances manufacturers and international small appliances brands is intensified within the industry. Manufacturers are struggling to avoid increasingly low level of profits and finding a suitable company’s competitive business strategy has become more urgent for ETK.Through SWOT analysis and feasibility study on business competitive strategies, this paper analyzes ETK’s external environment (macro environment, industry environment & major competitors) as well as internal environment (human resources, financial resources, technology development capability & marketing capability). In the light of the analysis, the paper advises for ETK to take the Focus Cost Leadership competitive strategy, and gradually develop into a more robust OEM/ODM/OBM Coordinating development model relying on capital and technology.This paper also analyzes the competitive strategies and development paths of several typical manufacturing enterprises in the small domestic appliances industry. TOP Electric Appliances Industrial Ltd is one of ETK’s direct competitors, share a common customer base and product lines. By the time it’s not yet a preferred manufacturer, it abandons the usual cost leadership strategy and shifts to a differentiation strategy, which results in the loss of customers. Crastal Technology (Shenzhen) Co., Ltd, based on cooperation with big international supermarket chains, reinforces technical strength, relies on its own patent accumulation and improves profitability. Guangdong Xinbao Electrical Appliances Holdings emerges from a total cost leadership strategy and becomes one of the nation’s largest manufacturers of SDA. It divides into two business units, Xinbao and Donlim. Xinbao still concentrates on low cost export-oriented business while Donlim aims at China market.ETK begins with the focus cost leadership strategy bearing in mind the company’s actual situation, adjusts its organizational structure, human resources management, corporate culture and emerging markets development. It then establishes a competitive advantage and gradually develops into a growing outstanding enterprise in terms of both sales and profit.In this paper, ETK is advised to take a focus cost leadership competitive strategy, through standardized design, large-scale procurement, and automated production to improve and expand cost advantage. Meanwhile, through cooperation with international brands, upgrades technical capabilities, builds technical core competitiveness. The company will lay a solid foundation in the transition and moves on from a simple OEM /ODM manufacturer to OBM small appliances manufacturer as well.