Source: CHEAA
Under big challenges including domestic demand contraction, global economic downturn and a shrinkage in overseas demand, China’s home appliance industry maintained steady in overall development in 2022 through an optimization of product mix, cost reduction and efficiency increase aside from the support from stimulus policies of the government. Years of dedication in technical innovation, user demand study and new retail mode innovation builds a concrete foundation for the healthy, sustainable development of the industry. With China's management of COVID-19 downgraded to the less strict Category B, the recovery of domestic market is expected to fuel the development of China’s home appliance industry in 2023.
Domestic market
China’s home appliance industry posted revenue of 1.58 trillion Yuan from January to November 2022, up 1.7% YoY, according to National Bureau of Statistics. The overall profit of the industry did not slide significantly in the past 2022 due to the rollback of raw material prices, increased exchange gains after the substantial appreciation of the USD and the tight expense control of enterprises amid the disadvantaged business environment.
Despite the steadiness of revenue and profit, the decline of some major indicators including the output, domestic retail sales value and export value of major products hint at a tough situation. Home appliance production was hard hit by the pandemic in 2022 with unsteady production scheduling and an output decline of most products, reflecting shrinking consumption orders and a weak domestic market. The overall retail sales value of China’s home appliance industry stood at 708.1 billion Yuan in 2022, down 7.4% YoY, the lowest in three years, according to omni channel data from All View Cloud.
Despite the decline of overall retail sales, there were some highlights too. In 2022, China introduced stimulus policies to encourage the replacement of old household appliances with new ones and bolster the consumption of green and smart home appliances in rural areas. This, coupled with the joint efforts of home appliance manufacturers and distributors put in promotion, led to a rise in sales of some green and smart home appliances. Plus, it’s worth noting that health-oriented products, high-end products and home appliance packages are still a big trend of the industry as enterprises keep upgrading their product mix amid the stagnant market. Haier Group, with its high-end brand Casarte and scenario-based brand Three-Winged Bird well established in the domestic market as well as its successful global strategy, posted global revenue of 350.6 billion Yuan in 2022, up 5.4% YoY.
The public’s concern with health has been higher than ever during the pandemic. In 2022, fresh air air conditioner rose with strong momentum. Mainstream air conditioner makers including Midea, Gree, Haier, TCL, Aux, Changhong and Hisense rolled out their next generation products that elevate user experience in many aspects such as fresh air, low noise level, and temperature and humidity adjustment. Washing machines, dryers, washer dryer combos, front loaders with clothes care functions, mini washing machines and dual-load washing machines that have bacteria removing functions become a new growth driver of the market. Large capacity refrigerators and refrigerators that have bacteria removing functions also gain traction during the pandemic.
Emerging categories including dishwashers, dryers, integrated stoves and floor washers rose against the headwind, becoming a growth engine of the market. It’s worth noting that performance of smart vacuum cleaning appliances still stood out in 2022 though the growth rate slowed after two years of explosive growth. Besides, personal care and beauty care products also have a large customer base.
Export
China’s home appliance export hit the 100 billion USD milestone for the first time in 2021, setting an all-time high. Entering 2022, the recovery of global economy clearly slowed amid the flare-ups of COVID-19, the Russia-Ukraine conflict, high inflation, and the slow growth of demand. The uncertainties of global environment coupled with the high base of last year led to a weak growth of export. From January to November 2022, the export value of home appliances from China stood at 90.1 billion USD in 2022, down 5.6% YoY.
Despite the slow growth, home appliance export of 2022 is second only to that of year 2021 historically. The export of home appliances slid in both value and volume in 2022 and that of components maintained a double-digit growth in 2022 though slowed in growth in recent two months after a consecutive rise since Q3 2020. The export performance differed when it comes to regions and countries with export to the ASEAN countries particularly standing out. From January to November 2022, China’s home appliance export to the ASEAN countries grew by 12.6% YoY in 2022, and it has maintained the double-digit growth since Q1 2020 with growth rate ahead of other countries and regions.
China Household Electrical Appliances Association (CHEAA) organized a meeting on foreign trade in 2022 with representatives from Haier, Midea, Hisense, Lexy, Xinbao, Homa, Robam and Highly joined the meeting. It is learned that enterprises closely followed the dynamics of foreign trade, adjusted their export strategies accordingly and took proactive actions to deal with it through cost control, the establishment of overseas factories and marketing channels in 2022.
Outlook
Home appliance consumption is expected to recover from Q1 2023 as the optimization of COVID-19 prevention and control measures gives more certainty to the recovery of domestic market. Domestic market will provide a stronger boost to the industry growth.
(1) Given the high penetration of traditional home appliance categories and the weaker impact of real estate cycle on home appliance industry, the industry is mainly driven by replacement demands of traditional categories and emerging categories that improves life quality through technical innovation. (2) As residents’ income recovers and improves, consumption market is thawing slowly. This will make a positive impact on domestic market. (3) The relaxation of real estate policies as well as the recovery of home furnishing sector is expected to provide a boost to some home appliance sectors whose channel management are at the home furnishing stage such as kitchen appliances and bathroom appliances. (4) The export will be under pressure given the high global inflation, the shrinkage of consumption demand and the order shift to overseas factories.