General Electric's China distributor tried to buy out the upstart Chinese fan maker that had broken its monopoly, and when that failed, tried to dump fans at a loss to crush it on price. Cutting the flagship brand's price to match would have destroyed the premium reputation that was its whole selling point, so the factory launched a second, cheaper brand instead and fought the price war with that one.

the problem

a price war forces a choice between defending a premium brand's margin and reputation or matching a predatory competitor's price cuts, and either choice alone looks like a loss

background

what everyone would do

The available response to GE's distributor cutting prices below cost was to cut Wason's own price to match, defending market share directly by fighting the price war on the same product line the attacker was targeting.

what they saw

Yang Jichuan and his partners saw that cutting Wason's own price to compete would have destroyed the exact thing the price premium depended on, the reputation for quality and durability built on a 10-year warranty and free repairs, meaning matching the attack directly would have won the battle by sacrificing the asset the whole business was built around. Rather than choosing between defending the flagship's reputation and matching the attacker's price, they launched a second, cheaper brand, Lion, built specifically to fight the price war exactly where the distributor had chosen to fight it, leaving Wason's price and positioning completely untouched.

the move

Rather than cut the price of the Wason-brand fan itself to compete, which would have undercut the reputation for quality and durability the brand had been built on, the factory kept Wason's price and specifications unchanged and developed a second, cheaper product line under a separate brand name, 'Lion' (狮牌), built specifically to compete with the distributor's discounted GE fans on price in the low end of the market. The two brands let the company fight the price war exactly where the attacker had chosen to fight it, without touching the pricing or positioning of the product the company's reputation actually depended on.

why it works

Keeping Wason's specifications and price unchanged while developing Lion as a separate low-end line meant the company could contest every dollar of the price war the distributor was waging without ever signaling to Wason's existing customers that the premium brand's quality or pricing had changed. Because Lion absorbed the low-end competitive pressure entirely, Wason's premium positioning stayed intact and continued generating the reputation-driven demand that had made the brand valuable in the first place, letting the company grow overall output to more than half its total production from Wason alone even while actively fighting a price war on a separate front. This two-brand structure meant the distributor's price cuts, aimed at making Wason unaffordable to keep making, instead just meant it was competing against Lion, a fight the distributor hadn't actually chosen or necessarily prepared for, while Wason's core business and reputation remained fully protected throughout.

the payoff

Wason fan output grew through the following years to roughly half or more of the factory's total production, with annual output later exceeding 70,000 units worth about one million yuan and daily output reaching around 200 units at the plant's peak, and Yang Jichuan became known in the trade as the 'Electric Fan King.' The dual-brand strategy held off the distributor's price war, and Wason expanded sales into inland China and Southeast Asia in the years that followed rather than losing ground to the discounted imports.

where it breaks

The mechanism depends on the company having enough capital and manufacturing capacity to actually build and sustain a second product line simultaneously with the original, a smaller manufacturer without the resources to run two brands at once would have no way to absorb the low-end attack without touching the flagship. It also depends on customers genuinely perceiving the two brands as distinct enough that the cheaper line's existence doesn't itself cheapen the flagship's image by association, a poorly differentiated flanker brand risks bleeding reputation back onto the premium product it was meant to protect if customers see through the separation. And this strategy specifically defends against a price-based attack on market share, it does nothing if a competitor instead attacks on genuine product quality, innovation, or a dimension other than price, since a flanker brand fighting a price war provides no defense against a rival actually building a better product at the premium tier.

what came after

Wason is credited in Chinese industrial history as the country's first domestic electric fan manufacturer and a formative case of a national brand successfully resisting a foreign monopoly's buyout and price-war tactics in the Republican era; surviving Wason fans are held in museum collections including the Ningbo Business Group Museum (宁波帮博物馆) as artifacts of that history.

references

1. [1]华生Wahson品牌介绍报告大厅 (ChinaBGAO), 2017m.chinabgao.com
2. [2]电风扇演变史：中国第一台电风扇的诞生可谓颇多波折北京日报 (Beijing Daily), 2022news.bjd.com.cn

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