Answer to Question #120161 in Management for veena talreja

Question

In the competitive business environment, there is a lot of strategic pressure on established companies to compete with the cheaper substitutes as well as maintain quality at the same time. Also there is a recent trend amongst consumers for "first copy/ duplicates" of branded products. Why do you think that these so called "Chinese manufacturers" are able to make products cheaper than most other products available? Also how do you think can competing and maintaining quality be achievable for companies for original branded products like Cadbury, Rayban, etc to tackle the other duplicate products?

Answer 1

China has a good infrastructure that supports the voluminous manufacture of different products. Moreover, most companies in China order raw materials in large volumes thus lowering the price of the finished products. Yet still, labor is extremely abundant and cheap in the nation owing to its large population of people living at the poverty level. Most importantly products competition is extremely high in the nation implying people always seek cheaper options which results to lower price of products to obtain a competitive advantage.

Nonetheless, duplicate products have a lower quality besides their poor color and texture compared to original products. Consequently, companies that manufacture original branded products like Rayban or Cadbury can compete with companies producing duplicate products, and sustain their quality by stressing on purchasing original products through various advertisement mediums, incorporating distinct brand codes and colors, and lastly providing information about the need to purchase original products.