Source: CHEAA-run China Appliance magazine
With a CAGR of more than 35% in the past ten years and a combined retail sales value 19 times that of 2014 in 2023, the dishwasher sector only has an annual retail sale of 11 billion Yuan now and its penetration rate, at 2.9% according to the estimation of All View Cloud, falls far behind the market expectation. Despite that, industry players still would like to pin it as a rigid-demand product in potential though rigid-demand products normally have a market penetration rate of more than 50%.
A conflict surfaces for the dishwasher industry after more than ten years of development. The low market penetration rate points to a vast growth in potential but the lack of market demands now. How to make the dishwasher market thrive?
Slowing growth rates year by year
In the past three years, the dishwasher sector saw a decline year by year in the growth rate of retail sales value despite its high CAGR of 35% in the past ten years. Retail sales data from All View Cloud said that, the growth of China’s dishwasher market by retail sales value stood at 14.9%, 3% and 8.7% in 2021-2023 respectively, and 6.5% in Q1 2024 which was slightly higher than the 2.9% growth of China’s kitchen appliance market in general. And for the same period, the growth of retail sales volume of the sector stayed at around 2% for three years on end.
But dishwasher is still regarded as one of the few categories with untapped demands among the kitchen appliance categories even the whole major appliance categories. The technologies used on dishwashers have not been fully developed to a perfect state, leading to intensified technological competition that brings out the vitality of the industry. At the past AWE2024, dishwasher is a key field of competition with exhibitors spared no efforts in displaying their innovations in the cleaning technology, product design, industrial design and cross-boundary integration.
As a sector with a theoretically huge market potential and high profit margin, the dishwasher market draws in huge industry players. According to incomplete statistics, the number of dishwasher brands on the market has exceeded 200. Brand influence and their technological capability weigh heavily on the choice of most dishwasher consumers who pursue high quality living experience. Data from multiple sources show that the market concentration of the top five dishwasher brands take a market share of more than 60% both online and offline, and the top sellers of the market by sales value are Siemens, Fotile, Robam, Haier, Midea, and Panasonic.
When a market is full of new brands and new technologies, it is supposed to grow robustly in a short time. But this is not the case for the dishwasher market.
It is believed that the pandemic and the shrinkage of the real estate market in the past three years, especially the restriction of people’s movements and the declining demands for new house furnishing, have taken the toll on the dishwasher market which heavily depends on home furnishing business and home installation as a high-priced, large capacity product.
Beyond that, my interviewee from Midea added that, consumers’ lack of awareness and the limited space of the Chinese kitchens were also behind the slow development.
Based on the responses of the customers’ survey and my related interviews, the key to further growth of China’s dishwasher market comes down to “suitableness”, which means the suitableness of products for Chinese consumers through the chain from design, marketing to service. With that, the sector could take off. Currently, the suitableness mainly comes from the unique demands of the Chinese consumers regarding product design, dish storage and cleaning performance.
(1) Product design
Compared to Europe and North America which have a high penetration rate of dishwashers, most Chinese kitchens are small. Old kitchens to be renovated mostly cover only around 5 square meters. Meeting the demands from old house renovation is a critical challenge of the dishwasher sector especially amid the sluggish new real estate market, which means optimized designs are needed to accommodate to compact kitchens. Midea, for instance, uses a systematic integrated design to effectively increase the space utilization by 15%.
Traditional design requires users to bend over to unload dishes. But most Chinese families who have a demand for dishwashers are extended families with seniors. This coupled with China’s aging society points to targeted designs to meet the demands of older population. Reflecting the trend, Casarte rolled out its drawer dishwasher.
Besides, upgrading product design to accommodate to Chinese cooking utensils of different sizes and shapes is also a direction of industry players.
(2) Dish storage
A few years ago, disinfection cabinets expanded fast in the Chinese market due to its timesaving, space saving advantage given by the dish storage function on top of the disinfection function. However, dish storage has long been a challenge for the dishwasher industry. Chinese users hold the belief that dishwashing, tiring as it might be, should be a quick household chore. But as dishwashers normally do not provide dish storage function, users must unload the dishes and store them to a different place after a long dishwashing and drying cycle, which means time consuming and space consuming for them.
Plus, the steams, pipes, greasiness and the enclosed environment which could encourage the growth of bacteria add to the existing concerns of Chinese users. Currently, BSH has dishwashers that support long time bacteria-inhibiting storage.
(3) Cleaning performance
The heavy use of oil in Chinese cooking, and the difference sizes and shapes of Chinese cooking utensils have long hindered the development of dishwashers in the Chinese market. Cleaning performance is always a key issue to address to meet the demands of Chinese consumers, making it a key competition area of brands.
Now the solutions are diversified among the industry with Fotile’s high-power bubble wash, Haier’s adding of an extra spray arm between the upper and the lower arms, and A. O. Smith’s solution of spinning the dishes to improve cleaning performance.
But still, it’s undeniable that, there is no perfect cleaning technology as of now that could perfectly clean any dishes in any conditions without damaging them.
In a nutshell, with undoubtedly great growth potential ahead, it still takes a long and hard way to deliver it. To reflect the unique demands of Chinese users, make a breakthrough and win the heart of consumers, technological innovations need to be done for the long-term development of the industry instead of the quick profit.