Source: CHEAA-run China Appliance magazine

China’s refrigerator industry forged ahead in the past decade amid the ups and downs of the market with the rise of large-capacity refrigerators standing out as a highlight.

From emerging category to the mainstream

China’s Home Appliances to Rural Area program ended in 2013, leaving a fully developed domestic market for China’s refrigerator industry who had just enjoyed a strong growth thanks to the stimulus program. It is learned that the number of refrigerators per hundred households in China’s rural area stood at 30 in 2008 according to data from that year, but the number doubled to reach 60 in 2012 when the campaign almost came to an end.

The conclusion of the program marked the beginning of a new chapter for China’s refrigerator industry. Data from GfK China Market Monitor show that China’s refrigerator market was lackluster in both sales value and volume from 2013-2022. The year-over-year changes was little compared to the market performance during the Home Appliance to Rural Area program.

Despite the overall flatness, some industry players made their names and laid a solid foundation for their development in the coming decade by seizing an opportunity, which is the R&D of large-capacity refrigerators.

Under the pressure coming from the revision of The Maximum Allowable Values of the Energy Consumption and Energy Efficiency Grade for Household Refrigerators in 2013, industry players smelled an opportunity in large-capacity refrigerator and started their deployment. In 2013, Haier predicted a future trend towards high-end, large-capacity and energy efficient models, and rolled out air-cooled, frost-free French door refrigerators and side-by-side refrigerators. BSH Home Appliances also rolled out multi-door refrigerators with zero-degree fresh keeping function in 2013 after the release of side-by-side models in the past year. Still in 2013, Midea and Meling optimized their product mix and positioned large-capacity refrigerators as mid-to-high range.

Monthly monitored data from China Market Monitor show that, refrigerators with a capacity of 280L or above saw a 6.7% rise in market share by retail sales value from January to August 2013 compared to same period of 2012; 301L-400L models saw a rise of 96.0% YoY; 401L-500L a rise of 129.4% YoY, and 500L models a rise of more than 30%.

From 2013 to 2022, large capacity refrigerators above 400L expanded in market share year over year and has grown to be the absolute mainstream of the market in 2022, according to weekly monitored data of online channels and monthly monitored data of offline channels from GfK China Market Monitor.

A decade of development

Of course, larger capacity itself cannot take the industry where it is. In the ups and downs of the past decade, we notice an upward trend of large capacity refrigerators, which attests to the recognition of the market and the continuous development of the category to accommodate to the changes of consumers’ demands.

The continuous update and growth allow the category to extend its reach into lower-tier markets while keep its position in mid-and-high-end market. The technical upgrade and the market expansion contribute to the market position of large-capacity refrigerators.

The technical upgrade has been ongoing for a decade. In 2014, variable frequency technology, air cooling and computer temperature control started to be widely applied. In 2015, intelligent functions and fresh-keeping functions emerged. In 2016, side-by-side refrigerators especially 4-door refrigerators became the mainstream of large capacity refrigerators as it well targeted consumers’ demands. In 2017, many mainstream industry makers released their signature fresh-keeping technology, such as Haier’s oxygen control technology and Meling’s M-Fresh. In 2018, intelligent technologies were integrated with fresh-keeping technologies to enhance the fresh-keeping performance. In the same year, 4-door models, once designed for high-end market, entered larger market, and refrigerators with multiple temperature zones were placed on the market. In 2019, industry players upgraded their fresh-keeping technologies such as temperature control, humidity control, oxygen control, bacterial removing, anti-bacteria function and odor removing to provide consumers more solutions. In 2020, large capacity refrigerators with health-oriented functions became a preferred choice of consumers due to the outbreak of Covid-19. In 2021, products designed for niche markets such as mother & baby care refrigerators, skincare coolers and wine cellars were rolled out. In 2022, technologies such as odor removing, bacteria removing, and separate storages gained traction as people’s demands for a quality household life grew amid the pandemic. And in this year, seamless built-in technology won recognition of high-income consumers.

Large capacity refrigerator is no longer a symbol of high-end products. As the replacement demand rises in the third- and forth-tier market, large capacity models have become a preferred choice of consumers during the pandemic. As a result, early models such as ordinary side-by-side and 4-door models expand in the market, becoming a rigid demand of consumers. Besides, personalized products such as seamless built-in models, glass panel models, customized storage zones, mother and baby care models, skincare models, medicine coolers, wine coolers meet the demand of different demographics who have been well studied by refrigerator makers, pointing to a demographic orientated trend.

The continuous technical upgrade of large capacity refrigerators allows the industry to develop towards diversification and personalization. An industry insider once told me candidly that, “the future of refrigerator industry lies in the improvement of cost efficiency on the basis of personalization, and the personalization of high-end models.” Another industry insider expressed same view, “we only need four or five models to manufacture 1 million units of refrigerators before but might need 100 models in the future.”

Solutions to personalized demands

Meeting personalized demands of consumers is a future trend, which roughly includes personalized looks and personalized functions.

To meet consumers’ demand for a personalized look, many industry players including Haier roll out seamless built-in technology and diversified panels to fit into different home furnishing. As to personalized functions, industry players really take the personalized storage demand of every member of a household into account. It is believed that small batch customization will be a new trend of high-end refrigerator market.

But the trend also brings a challenge to refrigerator makers. The R&D of large capacity refrigerators usually requires long time and big investment of resources aside from the high risks of it. Beyond that, the trend of demographic orientation, personalization and customization adds more challenges to it, as enterprises needs to have strong R&D, well understanding of consumer needs, quick response to market changes, and high-level flexible manufacturing capability to accommodate themselves to the new trend.

Looking back at the past decade, we see industry leaders such as Haier seized the opportunity of large capacity refrigerator in adversity with its strong technology and knowledge of consumer demands and promote the category to be a market mainstream. With the efforts of industry players, the industry tapped into high-end market with 10,000 RMB models or above placed on the market.

Looking forward, we believe only those with strong technology, manufacturing capability and precise understanding of consumer demands could really take the lead in the next stage of the industry development amid the trend of demographic orientation, personalization and customization.