Seoul, August 7th - Samsung Electronics has achieved remarkable success in the global smartphone market, which has also enhanced its reputation in the ordinary home appliance industry such as refrigerators and washing machines.
According to foreign media reports, in the past few years, Samsung has quickly seized the market share of Whirlpool, a local home appliance manufacturer in the United States. Another South Korean company, LG Electronics, also poses a threat to Whirlpool in the U.S. market.
A survey conducted by the market research firm Stevenson showed that in the second quarter of this year, Samsung's major home appliances accounted for 10.5% of the total U.S. market value, compared with only 2.3% five years ago during the same period. LG increased from 8.5% five years ago to the current 14%. In contrast, Whirlpool's market share dropped from 35.9% to the current 30.4%, General Electric (GE) decreased from 18.9% to 15.9%, and Electrolux fell from 9.6% to 8.4%.
Even competitors admit that Samsung and LG are tough rivals. Electrolux CEO Keith McLoughlin said: "They have brought products with highly innovative quality to the U.S. market and deserve their current market share." However, McLoughlin also noted that the Koreans' cooking appliances are not as good as their washing machine products.
Samsung's heavy investment in promoting mobile phones and other electronic products has further enhanced the brand awareness of its home appliances. According to data released by Kantar Media, Samsung spent $611 million on advertising alone in the U.S. market last year, ten times that of Whirlpool.
Longbow Research analyst David MacGregor said that Korean brands have actually promoted the improvement of home appliance quality. He added that the rapid update cycle of smartphones also forces Koreans to innovate quickly, and this technology drives the development of home appliances.
In the annual consumer satisfaction survey recently published by J.D. Power & Associates, Samsung's washing machine ranked first, while its dryer was second only to LG.
Korean brands are rising in the U.S. home appliance market
However, Koreans still face significant challenges in the U.S. Unlike Whirlpool and GE, they do not have close relationships with homebuilders, whose importance is becoming increasingly evident due to the recovery of the housing construction industry.
Most of Samsung's and LG's products are manufactured in Asia and Mexico, whereas Whirlpool and GE produce their domestic products locally in North America. The long supply chain makes it difficult to respond quickly and effectively to changes in market needs.
Samsung executives set a goal to surpass Whirlpool within two years and become the world's largest home appliance manufacturer. However, this goal seems somewhat unrealistic. Samsung has not disclosed specific sales data for its home appliance products. Currently, Samsung's home appliances are still categorized under the same department as its televisions. Nevertheless, analysts from the U.S. investment bank Sanford C. Bernstein estimate that Samsung's home appliance sales reached 13.4 trillion won, approximately $11.9 billion, last year.
Whirlpool, which only produces home appliances and related products, had sales of $18.1 billion in 2012.
Bernstein expects Samsung's total home appliance sales to reach 15.8 trillion won ($14.1 billion) by 2015, still below Whirlpool. Analyst Michael Deneen from Freedonia Group said that last year, LG was the world's fifth-largest home appliance manufacturer, and Samsung ranked eighth.
Samsung's performance is mainly driven by the smartphone and semiconductor industries, and home appliances account for less than 7% of its sales last year. In recent weeks, Samsung's stock price has fallen due to concerns about the slowing growth of smartphones.
The U.S. home appliance manufacturers are not willing to give in to Samsung's aggressive invasion. GE is currently implementing a $1 billion factory renovation plan over several years. To attract more young consumers, GE plans to launch a low-end fashion series brand in October this year.
Whirlpool said that its global design staff has grown by 50% in the past decade, reaching 200 people distributed across six countries. Whirlpool's profit margin continues to grow, and it stated that it will not rely on discounts to win the market. Whirlpool CEO Jeff Fettig said in an interview earlier this year: "We will not sell products at a loss."
Whirlpool also complained to the U.S. government, requesting import taxes on some imported appliances, but with mixed results. Earlier this year, after discovering that Samsung and LG were selling some washing machines in the U.S. market below normal prices, the U.S. government imposed punitive tariffs of 9%-13% on these products. However, last year, the U.S. International Trade Commission (ITC) rejected Whirlpool's request to impose tariffs on Samsung and LG refrigerators. Both Samsung and LG denied Whirlpool's dumping allegations in the aforementioned cases.