Asian consumers go back to basics in downturn

(Reuters) - Forget about bells and whistles. Asians have gone back to basics in the economic slowdown and are opting for no-frills, lower-priced products rather than brand names and items with fancy features that rarely get used.

Manufacturers across the region, the world's largest producer of electronics and white goods, are more than happy to oblige as they scramble for orders that will keep their heads above water until the economic tide changes.

"People are hesitant to buy top-notch, expensive models, but they still want to buy decent ones with some useful functions," said Kohei Ueda, a general manager at Bic Camera, a major consumer electronics chain in Japan.

From laptops without standard accessories such as CD-roms, to rice cookers and microwave ovens with minimal functions, brands such as Samsung and LG Electronics are quickly introducing basic items that can be sold at lower price points.

It's all about surviving the slowdown which has dealt a severe blow to Asia's export-dependent economies such as South Korea which saw exports drop 25 percent in the first quarter of the year alone.

"In an economic downturn, liquidity problems outweigh the factor of profits. Therefore, it would be important to keep their factories running and pay back debt," said Choe Soon-kyoo, a professor of Yonsei University's business school in Seoul.

"They are adopting that (low-price) strategy to maintain liquidity rather than to make profits," he added.

Buoyant sales from these products are providing relief, and much needed cash flow, to companies that posted heavy profit falls or swung to quarterly losses early this year such as Samsung Electronics whose earnings plummeted to 619 billion won in the March quarter from 2.2 trillion won a year ago.

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