From January to February 2023, revenue of China’s home appliance industry stood at 237.4 billion Yuan, up 2.9% YoY, and profit of it made a growth to reach 15.5 billion Yuan. Year 2023 marks the recovery of China’s home appliance industry.
As the impact of Covid-19 fallout eased in January to February 2023, enterprises expedited their production resumption. For white goods, the output and sales of air conditioners and that of washing machines made a growth while that of freezers slid from January to February 2023. For portable appliances, vacuum cleaner sector and electric bakeware sector maintained the downward trend of H2 2022. For kitchen appliances, range hood sector restored its growth in output while gas range sector experienced a slight fall.
Entering 2023, home appliance consumption got down YoY but is getting better MoM. For the first quarter of 2023, the retail market size of China’s home appliance industry (3C products excluded) stood at 155.4 billion Yuan, down 3.5% YoY, according to All View Cloud. Specifically, the retail sales of white goods saw a mild recovery with the retail sales volume of the sector up 1.9% YoY at 26.92 million units, and the retail sales value up 4.4% YoY at 77.3 billion Yuan; the recovery of kitchen appliance industry was slow and categories under its umbrella have not restored in growth neither in retail sales value or volume; portable kitchen appliance market was also slow in recovery with retails sales volume at the same level YoY and retail sales value down YoY, according to All View Cloud.
Entering 2023, the consumption in brick-and-mortar stores has been expected to recover by home appliance industry players. But statistics show that the recovery has been slow with no significant rise. For Q1 2023, retail sales value of white goods sold at online market grew by 6.4% YoY while that at offline market rose by 2.9% YoY; kitchen appliances and portable kitchen appliances saw a slide of retail sales value in both online and offline market; some emerging categories including vacuum cleaning appliances saw a recovery in offline sales, according to All View Cloud.
Channels of home appliance industry have changed a lot after the pandemic. While brick-and-mortar stores struggled on the edge of survival, online channels grew fast under the influence of the pandemic with emerging social media platforms such as Douyin (the Chinese TikTok), Kuaishou and Xiaohongshu stretching themselves into e-commerce and other new modes of e-commerce such as interest-based e-commerce, content-based e-commerce, and live streaming e-commerce gaining traction.
It’s worth noting that raw material prices have been at a relatively low level entering 2023 which contributes to the recovery of profit for home appliance enterprises.
The export of home appliances from China has been under pressure since the beginning of 2023. From January to March 2023, the export value of home appliances from China stood at 23.798 billion USD, down 5.2% YoY. The export volume of large appliances (except for washing machines) experienced a fall; most categories of portable appliances maintained the downward trend of H2 2022 in both value and volume with only personal care appliances securing a growth; the export of components maintained the sluggishness of Q4 2022 of which the export of air conditioner compressors kept a rise in value and a fall in volume that started from last year and the export of refrigerator compressors a fall in both value and volume starting from last October; the export of air conditioner components have been steady.
The export performance differed from January to February 2023 when it comes to regions and countries with export to the US, the EU & the UK, Japan, Australia/Canada, ASEAN countries going down by export value YoY, and export to the BRICs and West Asia/North Africa going up by export value YoY.
China’s home appliance industry has been on a path of global expansion for more than 20 years. Currently, emerging countries such as ASEAN countries, Middle and Eastern African countries and South American countries have risen to be an important option of China’s home appliance industry in global expansion.
We’re convinced that the recovery of China’s domestic home appliance market will be more certain in 2023, and it is believed that signs of the recovery will be more obvious after Q1 as residents’ income gradually recovers.
(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 instead of new demands, which means there still are big growth potential for emerging categories but it doesn’t seem likely to see a fast growth across the board. (2) The pandemic in 2022 dragged residents’ income and dented consumers’ spending confidence. But as residents’ income recovers and improves after the optimization of the pandemic control measures in China in 2023, China’s consumption market is thawing slowly, which will make a positive impact on the operation of brick-and-mortar stores. (3) The relaxation of real estate policies 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. After the optimization of pandemic control policy, home appliance consumption is expected to recover in Q2 due to a lagging effect.
As to overseas market, the world economy is expected to slow the growth for a long time with the Russia-Ukraine conflict in a deadlock and the rate raising moves of central banks in Europe and America. Entering 2023, the downward trend of commodity consumption in Europe and America has not changed though the service consumption is recovering. Plus, with the production resumption of overseas facilities after the relaxation of pandemic control measures and some orders transferred to Vietnam, India and Mexico in 2022, China’s home appliance industry saw a shrinkage of overseas orders. We learn from industry players that the export scale to Russian and Middle Eastern countries saw a clear rise and as the inventory of retailers in Europe and America is recovering from a low level, the overseas demand is expected to see a slight recovery in Q2 or H2.