What are Three Motivators to Galanz's First Price War?
1) Chinese households were ready to modernize their kitchen, significant price reductions would increase sales by about 100%.
2) Price wars can consolidate the industry by marginalizing small, inefficient players, reorganize the industry for a sustainable future of growth (A high profit margin in the industry would both encourage excessive entry and hide inefficiencies going forward).
3) A well-planned and executed price war would benefit Galanz by establishing its cost advantages in the marketplace.