Ordinary Gweilo

Imagine for a moment that you are a large Chinese PC manufacturer.  You wish to launch your branded PCs internationally.  Should you

(a) price your PCs at a premium to the market

(b) price your PCs at a similar level to HP & Acer

(c) go for low prices.  Sell more.  Get your brand recognition up.  Then perhaps increase prices.

Doh!  That’s not hard, now is it?  Yet the front page of the SCMP Technology section is given over to a large "story" about Lenovo setting low prices for their desktops and laptops.  Apparently this might not be a good idea.  Of course it’s a good idea, you idiots. 

The story is here if you have access to the very reasonably-priced SCMP website:

The first thing you notice about the Lenovo 3000 line of computers – the mainland company’s first foray into the international market and a major milestone as it attempts to build global brand recognition – is the price: just US$350 for a desktop and US$600 for a laptop.

It is a curious move. China is not known for its brands. In places such as Europe and the United States, the mainland’s reputation is mainly as the world’s low-cost producer, an economy where companies compete not on technology or innovation but on price.

Why then would Lenovo price the 3000 line so cheaply? For a Chinese company trying to build an identity separate from IBM, whose PC business it bought for US$1.75 billion last year, debuting with a low-priced offering would seem risky.

"They really do need to be careful if they are trying to use price as an angle, especially if it is the first thing out of the barn and the first thing people hear is, `Hey, cheap products’," IDC analyst Bryan Ma said.

"One of the perceptions of China – which may or may not be true – and one of the perceptions of Chinese vendors is that they tend to participate in low cost, and low cost tends to be associated with low quality, and that is not the image that they would want to be projecting."

What are they on about?  Makes no sense at all.