Competition Issues in Electronic Goods Sector: Washing Machine Industry

The Indian Washing Machine industry is going through turbulent transformation. Companies are re-looking at their strategies and are desperate for growth. The entrenched position of the Indian market leaders in Washing Machines’ like Videocon, BPL and Onida has been challenged by the MNCs such as LG, Whirlpool, Samsung; some in a perceptible way and others threatening to do so. The changing environment demands fresh thinking to gain the cutting edge advantage. Exchange schemes, free gifts, price offs, prizes, deferred payment schemes and other incentives as promotional tools have been deployed by the players, which certainly have made the market, vibrant and pulsating. A major factor contributing to the growth has been availability of consumer financing schemes. Concomitantly, the industry has been witnessing a new scenario with a new market profile. The entry cost into this industry is substantially low. Thus, there is already a lot of competition in this sector and due to this, consumer is benefiting by not only getting the above benefits, but also world class products of high quality at reasonable prices. Due to this, washing machine is now a necessity of every house, whether in rural India or Urban India. This paper talks about the Washing Machine Industry in India, its market structure and challenges and opportunities it faces. The paper uses econometric techniques to deal with the issue of market concentration. Towards the end, a hypothetical situation is created where the major Korean MNCs, LG and Samsung get together and play in the market as a single entity. The paper analyses the reasons and results for this merger, and the economic theory and the competition issues emerging with this collaboration