Source: CHEAA
China’s economy was in a period that featured post-pandemic recovery and proactive policy support in 2023. In the first half of 2023, the traveling consumption and some service-related consumption resumed fast among Chinese residents but that of durable consumer goods including home appliances lagged behind slightly though on the path of recovery. As to overseas market, the global economy remained stable with signs of improvement and the inflation in the Europe and the America continued to decline year-on-year, which took off some pressure on industry players that came from the inflation of overseas markets and destocking in overseas markets. In the second half of the year，exports began to recover noticeably, leading to positive growth for the entire year.
China’s home appliance industry posted revenue of 1.84 trillion Yuan in 2023, up 7% YoY, with profits reaching 156.5 billion Yuan, an increase of 12.1% YoY, according to National Bureau of Statistics.
The annual performance forecasts released by listed home appliance companies showed stable growth across major enterprises, although some experienced a slowdown in growth rates in the third quarter. According to feedback from over 100 member companies surveyed by the China Household Electrical Appliances Association, over 60% of surveyed enterprises maintained revenue growth, with nearly 50% maintaining profit growth in 2023. Overall, in 2023, raw material prices remained relatively low, alleviating some of the cost pressures on the home appliance industry. The Chinese Yuan exchange rate showed overall resilience in 2023, effectively playing a stabilizing role, while companies continued to focus on cost reduction and efficiency improvement. These factors contributed to the increase in industry scale and profits, although profit growth rates slightly decreased in the second half of the year.
The output of home appliances maintained steady growth in 2023, of which that of refrigerators, air conditioners and washing machines all rose by more than 10% YoY and that of portable appliances and kitchen appliances also experienced varying degrees of growth, according to National Bureau of Statistics.
In 2023, stable recovery was observed in domestic home appliance market under the influence of consumption promotion policies carried out in national level and provincial level. Statistics from All View Cloud show that, the domestic retail sales of home appliances (with 3C products excluded) reached 849.8 billion Yuan, up 3.6% YoY and domestic sales of air conditioners surged by 7.5% YoY due to high temperatures, driving overall growth in the domestic market. Emerging categories such as floor washers and dryers remained stable, with promising growth due to their relatively low penetration. And some traditional categories such as hair dryers were revitalized by technological innovation.
Here are the two trends observed from China’s domestic home appliance market in recent years. On one hand, the upgrading trend of home appliance consumption remains unchanged and sales of high-end, new products maintained the growth even under the impact of the pandemic. On the other hand, consumers are more sensitive to prices after the pandemic. Statistics from All View Cloud show that, entry-level products posted better performance than mid-to-high-end products at online market.
Since 2023, apart from the European region, which continued to suffer from geopolitical conflicts and remained sluggish, economies in the United States, the Middle East, India, and Japan have all shown signs of recovery. The home appliance export was affected by many factors such as destocking cycles, weakening price effects, production capacity shifting abroad, and geopolitical tensions. But entering the second half of 2023, the export of home appliances gradually picked up following the rise of overseas demands and the decline of inventory in overseas market. Statistics from General Administration of Customs show that, the export value of China’s home appliance industry stood at 98.58 billion USD, up 1.36% YoY. China’s home appliance exports continued to differentiate among various countries, with improvements seen in developed economies and steady progress in developing economies.
From a global market perspective, the internationalization of Chinese home appliance industry has a history of more than 20 years from OEM, ODM to independent brand building, overseas manufacturing, overseas acquisitions, joint ventures, etc. Some leading players have been building their internationalization system for more than a decade with mature marketing system and long business partners established, leading to a growth in overseas revenue year by year. But now, the rising trend of regionalization in supply chain increases the difficulty of global market expansion, making emerging markets such as ASEAN, the Middle East and Africa and South America rising to be important options for companies’ global layout.
Entering 2024, the recovery of the home appliance industry is expected to continue, aided by relaxed real estate policies, sustained macroeconomic improvement, and consumption stimulus policies. However, it’s worth noting that residents still face big employment pressure, signs of a slowdown in disposable income growth are apparent, and consumer confidence remains weak, indicating a relatively weak domestic consumption recovery for the home appliance industry in 2024.
In the short term, the risks faced by the home appliance industry in exports mainly include overseas inflation, inventory cycles, regional conflicts, technical trade barriers, etc. In the medium to long term, the global industrial chain and supply chain are restructuring, following the emerging trend of regionalization, localization and diversification. Meanwhile, Southeast Asian countries represented by India and Vietnam, and Mexico that has been benefiting from the United States’ nearshoring, seize the opportunity to attract and undertake the shift of labor-intensive industries and low value-added sectors globally. In this context, China’s home appliance industry players need to be flexible and adapt themselves to fit into the new pattern in their global expansion and finding suitable places when overseas manufacturing becomes a necessity. In this process, China’s home appliance industry looks to enhance its global influence with its full industry chain, digitalization iteration, improved R&D innovation capabilities and its continuous dedication in channel and brand building.
China is the world’s largest exporter as well as a big consumer of home appliances. Though the industry generally tends to be conservative in the expectations for 2024 given the complex internal and external environments, there are still plenty opportunities for the industry in packaged appliances, the integration of home appliances and home decoration, high-end appliances, niche markets, health-oriented products, smart appliances as well as emerging categories with relatively low penetration such as dishwashers, dryers and vacuum cleaning appliances when the industry enters a stage where most growths are driven by existing demands rather than new demands.