China's home appliances whir
Chinese home appliance makers are accelerating steps to expand their presence in the Middle East and Africa, and looking to enhance brand awareness and boost product sales by sponsoring or providing products and technologies for the ongoing FIFA World Cup in Qatar.
Data from the China Chamber of Commerce for Import and Export of Machinery and Electronic Products' home appliances branch showed that China's exports of home appliances to Qatar rose more than 10 percent year-on-year in the first 10 months.
Meanwhile, China's exports of color televisions to the 22 members of the League of Arab States, including Qatar, soared 29 percent in the January-October period from a year earlier, while the exports of white goods jumped 11.21 percent.
As one of the official sponsors of the FIFA World Cup in Qatar, Chinese home appliance manufacturer Hisense Group is stepping up efforts to expand its footprint in Middle Eastern and African markets.
"The Middle East is one of our fastest-growing regions globally and serves as a crucial part in Hisense's globalization strategy," said Ou Yang, general manager of Hisense's Middle East and Africa division, while noting that the company's sales achieved a 31.5 percent year-on-year increase in 2021 in these regions despite the COVID-19 pandemic, price hikes in raw materials and soaring sea freight rates.
Hisense opened its first physical store in Dubai, capital of the United Arab Emirates, in March, marking a strategic milestone in the company's regional expansion initiative. It plans to open 10 brick-and-mortar stores in the Middle East and Africa this year.
The Qingdao, Shandong province-based company hopes to enhance brand awareness and influence by sponsoring major sporting events around the world. It sponsored several world-class sporting events, including the UEFA Euro 2016 and 2020 tournaments and the 2018 FIFA World Cup in Russia.
Ou said Hisense will strengthen its cooperation with FIFA and other institutions, launch tailor-made products and build stronger emotional relationships with consumers in the Middle East and Africa, as well as accelerate the company's globalization process.
Currently, the company has branches in Dubai and South Africa, with a sales network covering 1.48 billion people in 70 countries in the Middle East and Africa. It also aims to build its own aftersales service and call centers in major cities of these regions.
Sales revenue of Hisense in these regions had risen from 1.53 billion yuan ($220 million) in 2012 to 9.37 billion yuan in 2021, with an average annual growth rate reaching 25.9 percent, according to Hisense.
"We regard the Middle East and Africa as pilots to explore our new businesses, including laser TVs, smartphones, intelligent traffic solutions and intelligent healthcare," Ou said, adding that they will launch high-quality products in accordance with the requirements of local consumers.
"The Middle East and Africa serve as important markets in the Belt and Road Initiative, presenting huge growth potential for enterprises to build self-owned brands and develop cross-border e-commerce," said Zhou Nan, secretary-general of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products' home appliances branch.
Despite geopolitical instability, Chinese enterprises have not slowed their pace of development in these countries, Zhou said. "In recent years, some Middle Eastern countries, such as the United Arab Emirates and Saudi Arabia, have accelerated economic transformation, expecting more Chinese companies to invest and start businesses there, which also brings about new opportunities for Chinese brands."
Liang Zhenpeng, an independent consumer electronics analyst, said sponsoring international sporting events like the World Cup has become an effective way for Chinese home appliance companies to promote brands and boost sales of products in overseas markets.
"In the past, most Chinese enterprises adopted the original equipment manufacturer model, but nowadays they tend to build up their own brands in a bid to bolster competitiveness on the global stage," Liang added.
Other Chinese home appliance makers, such as Midea Group and Gree Electric Appliances, have offered air conditioners and related services for the Qatar World Cup and stepped up investment in the Middle Eastern and African markets, which have shown soaring demand for high-efficiency heating, ventilation and air-conditioning systems.
Midea has provided 2,500 air conditioners for 100 security check centers at the tournament venues and its central air conditioning systems have been installed at eight game venues, most of the media centers and some supplementary facilities.
Many World Cup venues in Qatar, including the Education City Stadium and Stadium 974, and a fan village, are equipped with central air conditioning systems provided by Gree, with the total number exceeding 40,000 units.
"The proportion of Midea's self-owned brands has reached 80 percent in the Middle East, with products sold in the market mainly coming from our factories in China, Italy and Egypt," said Dennis Lee, the Middle East and Africa general manager of Midea Building Technologies Overseas Sales Co.
Midea has been seeking opportunities to achieve localized manufacturing in the Middle East in recent years in hopes of offering faster delivery for local consumers, Lee said.
There is a huge demand for air conditioners in the region due to its high temperatures, Lee added. In 2010, Midea invested $57.48 million to acquire a 32.5 percent stake in Egypt's major air conditioner supplier Miraco to become the company's second-largest shareholder.
The company has set up an overseas office in Dubai and a refrigerator, washing machine and water heater factory in Egypt that serves the Middle Eastern and African markets.
"We will continue to offer low-carbon, energy-saving and intelligent building solutions for the Middle Eastern market, speed up our localization efforts, especially in the business-to-business segment, and employ more local people engaged in sales, technology service, finance and operations in the future," Lee said.
In what appears to be an inevitable trend, Chinese home appliance manufacturers are expanding their footprint to overseas markets for new profit growth points and long-term development, as the domestic home appliance market is almost saturated, said Zhao Meimei, assistant president of Beijing-based market consultancy AVC.
Statistics from AVC showed that the sales revenue of China's home appliances sector reached 338.9 billion yuan in the first half, down 9.3 percent year-on-year.
Haier Smart Home, a subsidiary of China's largest home appliance manufacturer Haier Group, entered the Middle Eastern and African markets in 1998. It has two industrial parks (one is still under construction) and three plants in African countries including Egypt and Nigeria.
In August, the company announced its plan to establish an industrial complex covering 200,000 square meters in Cairo, Egypt, with a total investment of $130 million.
"Expansion into overseas markets will not only relieve the pressure of high inventories in the domestic market but will increase the international influence of Chinese home appliance companies," said Dong Min, deputy secretary-general of the China Video Industry Association.
He added that setting up overseas production bases will not only bring China's advanced manufacturing, research and development and management capabilities to overseas markets, but also create more jobs for locals.