Whirlpool (NYSE:WHR) is a giant in the global home-appliance market. Based on JPMorgan estimates, it is also the market leader in the U.S. market, with an estimated 40% market share; General Electric (NYSE:GE), through GE Appliances, is in second with about 20% market share. Despite being also No. 1 in Latin America and the second largest in India, Whirlpool has a relatively small presence in the growing Chinese home-appliance market.

In contrast, Bosch-Siemens, a 50-50 joint venture between Siemens (OTC:SIEGY) and Bosch, is now the largest Western home-appliance brand in China. On the other hand, General Electric hasn't actively explored or entered the Chinese home-appliance market. The different choices and decisions about the Chinese market have led to varied results, which will be explored below.

Whirlpool first entered China in 1995 through a joint venture with a leading local brand known as Snowflake, which failed to live up to expectations. Whirlpool Snowflake sold only slightly more than half of the refrigerators it produced in 1996 and suffered a loss of $11 million in that year.

Following the termination of the Whirlpool Snowflake joint venture in 1997, Whirlpool has explored various options, including joint ventures and M&A. Whirlpool formed a joint venture with Hisense Kelon in 2008 to manufacture washing machines in Zhejiang, China.

In August last year, it announced that it will purchase a 51% stake in Hefei Sanyo, with the transaction expected to be completed by year-end. According to China Market Monitor, Sanyo is the third-largest brand in the Chinese washing machine market, with a 10.1%market share. While this acquisition will expand Whirlpool's manufacturing and distribution footprint, M&A comes with its own set of integration and execution risks.

In contrast to Whirlpool, Bosch-Siemens has chosen to leverage on its own strengths expanding into China.

According to market research company GfK, the market share of high-end home appliances in China has grown significantly over the past decade. Home appliances priced at 7,000 yuan (about $1,150) or more made up 15% of total home-appliance sales in 2012 compared with a market share of 4% in 2004. Another survey by the China Electronic Chamber of Commerce Office found that the top three consumer criteria for high-tech consumer appliances were applications of high technology, internationally renowned brands, and user-friendliness.

These two surveys illustrate exactly what Bosch-Siemens has done right. Unlike Whirlpool, a mid-range brand, Bosch-Siemens' status and positioning as a high-end brand meant that it was likely to be perceived as higher quality by Chinese consumers right from the beginning. Furthermore, it has put a strong emphasis on innovation to ensure that its premium branding stays intact.

Since the mid-1990s, Bosch-Siemens has had its own production facilities in China, and it started a research and development center in Nanjing, China as early as 2005. In March 2011, it announced that it will invest close to 100 million euros to build a new plant and a new development center in China. The new plant will increase Bosch-Siemens' production capacity and produce premium refrigerator products such as bottom-freezers and multidoor models, while the new development center will develop models specifically tailored to the needs of Chinese consumers.

The results speak for themselves. Bosch-Siemens has grown its revenue from China by 326% since 2005. It now has an estimated 11.4% of the Chinese refrigerator market, behind Haier, Hisense, and Midea, but ahead of other Chinese players Rongsheng and Meiling. This is by no means an easy feat, considering that most of its Western peers have failed to gain significant market share in China.

General Electric
To understand General Electric's choice of focusing on its domestic market in the area of home appliances, it is worth going back to former CEO Jack Welch's mantra that General Electric should be No. 1 and No. 2 in every business. General Electric correctly assessed that it didn't have an edge over home-grown Chinese home-appliance manufacturers in either lower costs or differentiated products.

Firstly, because of the heavy weight of home appliances and the need to customize products to suit local preferences, foreign home-appliance makers had to set up factories in China to sell products in the local markets. But they had no meaningful cost advantages over the local players. Secondly, the local companies had a better understanding of the Chinese market and were able to customize appliances accordingly.

While General Electric's decision to ignore the Chinese market might seem too conservative in the past, it is more likely viewed as a wise decision today. Despite the relative success of a minority like Bosch-Siemens, most foreign players have had relatively little success in the Chinese market. Instead, General Electric has maintained its position as a strong No. 2 in the U.S. home-appliances market by focusing its energies on the domestic market and avoiding the distractions associated with foreign market expansion.

Foolish final thoughts
In the face of opportunities associated with growing foreign markets, companies have two choices. They should stay in their home market if they can't leverage their competitive advantage overseas, like General Electric. Alternatively, if their brand equity or technological superiority can be transferred to foreign markets, they should proceed cautiously with a long-term view like Bosch-Siemens.

The jury is still out on Whirlpool and its acquisition of Hefei Sanyo, but corporate history replete with failed M&As should offer some cautionary tales.