Source: CHEAA-run China Appliance magazine
In the first half of 2024, China’s home appliance industry was under a continued influence posed by the downturn in the real estate sector and weak consumer expectations. The trade-in policy was introduced but produced little effect in the first half of 2024 as it was in the early implementation stage. But the demands of overseas market were going up amid global trade recovery, reshaped global supply chain, cooling global inflation, easing monetary tightening cycle and a changeover in the stocking cycle.
Revenue and profit
Despite pressures from slowing global economy and weak domestic consumer spending, China’s home appliance industry, with strong resilience, made a steady growth. According to National Bureau of Statistics, combined revenue of China’s home appliance industry stood at 1.1 trillion yuan from January to July 2024, up 4.6% YoY, with profit reaching 88.02 billion yuan, up 6.9% YoY.
Production
In 2024, the production of major home appliances rebounded driven mostly by overseas orders. Production and sales data indicate a significant increase in the production and shipment of white goods. From January to July 2024, the production and shipment of white goods grew by over 10% boosted by rising raw material costs, recovered overseas demands, and stock replenishment in overseas markets. But the domestic sales remained sluggish, leading to a high inventory across the industry.
As to portable appliances and kitchen appliances, range hoods and gas stoves experienced a decline in production, while others achieved an increase.
Domestic retail sales
From January to July 2024, the Chinese home appliance retail market showed slight weakness. The government launched the trade-in policy to promote the consumption on green home appliances, and retailers moved up their promotions for the June 18 (“618”) shopping festival to the end of May. But the real estate market remained sluggish, and the consumer confidence was still low. The market demand needed further stimulation. According to data from the AVC, the retail market of home appliances from January to July 2024 stood at 472.2 billion yuan, a year-on-year decline of 4.3%. For this period, four key changes in the domestic retail market are noteworthy:
1. Air conditioner retail market experienced a significant slowdown while the performance of refrigeration and laundry products remained stable.
From January to July 2024, the domestic white goods market scaled down, with a marked slowdown in the air conditioner retail market while refrigeration and laundry products remained relatively stable. The overall market of the kitchen appliance sector and portable appliance sector grew in volume but decreased in value.
2. With consumers shifting to consumer experience and cost efficiency, the market competition gets more intensified.
As consumers switch to place more interests in consumer experience and cost efficiency instead of brand premium, home appliance makers are urged to make a change to their previous upgrade-driven business mode.
With traditional home appliance market getting saturated in recent years, there has been opportunities lied in emerging categories and high-end products which both made a growth even in 2023 when the overall consumption experienced a downturn. But entering 2024, high-end products showed signs of sluggishness in growth, driving the industry to compete on cost effectiveness as the previous structural upgrade strategy hit a bottleneck.
It’s worth noting that the retail channels of the Chinese home appliance industry are getting fragmented. With traditional e-commerce giants such as JD.com, Tmall and Suning at a standstill in the growth of consumer traffic, the traffic costs of emerging social e-commerce platforms such as Douyin and Xiaohongshu are rising up.
3. The “618” home appliance sales were lackluster.
The overall performance of the home appliance market during the “618” shopping festival fell short of expectations. The structural upgrades of white goods lose the momentum due to the weak consumer demand. And it’s worth noting that low-price products are taking a bigger share of the market both online and offline.
4. The government stepped up efforts in the trade-in policy
On August 25, the Ministry of Commerce and four other departments issued a notification on further enhancing the trade-in policy for home appliances. The notice specified that localities could independently determine categories of appliances eligible for subsidies under the “8+N” model, with a maximum subsidy of 2,000 yuan per item. Home appliance players hold high expectations for the policy, hoping it would stimulate the domestic demand effectively.
Export
The home appliance export maintained the recovery trend since August of last year, posting a 9.5% growth YoY in Q1 and a 12.1% growth YoY in Q2. From January to July 2024, the combined export value of home appliances stood at 66.05 billion USD, up 13.2% YoY, according to General Administration of Customs. The export has been on a rise since the rebound in last November, hitting historic highs consecutively. Category wise, the export value of large appliances, portable appliances and components all achieved a YoY growth from January to July 2024.
From January to July 2024, China’s home appliance industry posted growth in exports to most countries and regions. Notably, export value to Japan, being sluggish since last year, turned positive in growth for the first time this year though the export volume still declined YoY. Exports to emerging economies have improved steadily, with ASEAN in the lead by growth.
Outlook for 2024
For the first half of 2024, the home appliance industry is on a weak recovery. With low consumer confidence and weak domestic demand, the industry competition is getting fierce and the cost pressure is on. It’s worth noting that the trade-in policy has been launched and we’ll have to wait and see if it could provide the boost as expected.
In the first half of 2024, China’s home appliance exports grew on a fast rate due to the stock replenishment of overseas markets following the end of their destocking and the rapid development of cross-border e-commerce platforms such as TEMU.
The U.S. consumer market has shown signs of weakening under a long-term high-interest rate, but the impending U.S. elections and rising expectations for tariff raising could lead to an increase in export orders for some products. Besides, while cross-border e-commerce brings new orders, the profit per order is declining due to intense competition. Beyond that, with expectations of the Fed’s further interest rate cut in 2024, a slight appreciation of the RMB against the U.S. dollar may occur, which would make an impact on export-oriented enterprises. Despite all that, the export of China’s home appliance industry is expected to exceed 100 billion USD 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. Southeast Asian countries represented by India and Vietnam, and Mexico who 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. But despite the challenges ahead and the pressure they bring, there’s still a vast global market there for the Chinese home appliance industry with its full industry chain, digitalization iteration, improved R&D innovation capabilities and its continuous dedication in channel and brand building. It requires strengthened capabilities of Chinese home appliance enterprises including technological innovation, global operation and risk prevention and control.