CNBC AI News, June 30 – Zhu Lei, Marketing Director at Gree Electric, has publicly criticized competitors, warning that a strategy of aggressive price wars, often termed “involution,” ultimately harms the companies themselves more than their rivals.
In his remarks, Zhu Lei highlighted a specific, prominent Chinese television brand that has leveraged its established overseas distribution network to enter the air conditioning market. He pointed out that this competitor is operating with a net profit margin of merely 3%, essentially selling units at cost or “barely profitable.”
“We directly asked their overseas distributors, and they told us, ‘We don’t have KPIs like growth or market share. Our only KPI is to drive our Chinese competitors out of business,'” Zhu Lei recounted, expressing his strong skepticism about such a strategy. “But can you truly drive your competitors out of business? Or will you just end up destroying yourselves?” He added, emphasizing the responsibility that comes with market leadership: “The industry leader must live up to its stature.”
This outspoken commentary from Gree’s executive has resonated widely, sparking a robust debate among industry observers and the public. Many are echoing Zhu Lei’s sentiment, arguing that this relentless price cutting offers little benefit to consumers. The prevailing concern is that other manufacturers are being forced to compromise on the quality of components, which, in appliances built from numerous parts, can significantly impact longevity and overall user experience. The question remains: is this short-sighted “involutive” competition truly sustainable or in the best interest of the industry or its customers?
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