Date: 2017/2/27
Surviving the flatness in the first half of 2016, China’s home appliance industry secured improved market performance in the second half, featuring a rebalanced industry structure and product mix, and enhanced product quality. It witnessed upgraded consumption structure of consumers, continued industry transformation and upgrading, and improved quality of its economic growth. Driven by the government’s call for supply-side reform, industry transformation and upgrading, and consumption structure upgrading, China’s home appliance industry is set to forge ahead in the coming 2017.
Year 2016 saw stable growth and an upgrading of consumption structure
According to statistics from National Bureau of Statistics, revenue of China' home appliance industry for 2016 registers 1.46 trillion Yuan, a year-on-year increase of 3.78%. And its total profits register 119.69 billion Yuan, a year-on-year increase of up to 20.37%. The overall performance of the industry in 2016 was slightly flat amid slow recovery of global economy, slow growth of domestic macro economy, exchange rate fluctuation and consumption overdraft. But it saw updated consumption structure and improved economic growth quality, thanks to what industry players have done in product mix rebalance and technological innovation.
Chinese consumers are looking at products that elevate life quality, rather than ones that only serve their basic needs. This change in consumption preference, fueled by increased income of residents, presents an opportunity for China’s home appliance industry to evolve. Home appliances have an increasingly close connection with household life, and even become a symbol of one’s aesthetic.
Home appliances went stylish and health oriented in 2016. More smart products were rolled out, featuring WIFI, human-computer interaction, connectivity, self-learning etc., and more health-oriented products were placed on market, such as self-cleaning washers, multi-compartment washers, refrigerators that offer ultimate freshness and blenders that keep the maximum nutrition of food. Along with that, stylish appliances gained popularity as the ’80s and ’90s generations’ purchasing power grew.
Domestic sales grew at a steady pace. Refrigerator, washer and air conditioner sectors saw a slight increase, while kitchen and bathroom appliance sector maintained exciting performance with a climb both in retail sales and volume. Online sales stayed strong, with large appliance sector and kitchen small appliance sector maintaining a robust growth.
China’s home appliance industry maintained a historically high level in exports in the past year. Statistics from China customs suggest that, the export value of home appliances for 2016 registers 56.83 billion US dollars, a year-on-year increase of 0.5%.
Competitiveness of the industry grew thanks to technological innovation
China’s home appliance industry has been committed to innovation since the 12th Five-Year Plan. By building a talent pool, a global R&D system and overseas R&D centers, and adopting an open approach to innovation, enterprises produce a large number of technological achievements, and have a growing number of independent intellectual property rights. With critical projects on refrigerating compressors, electric machines, magnetrons, heat exchangers and protectors finished, they made core technological breakthroughs, consolidating their global competitiveness greatly.
Guidance on the Development of China Home Appliance Industry during the 13th Five-Year Plan Period from China Household Electrical Appliances Association (CHEAA) points out that, this industry must transfer from production factors-driven into innovation-driven, as a way of elevating international competitiveness and influence. In recent years, main industry players explore new opportunities and enhance competitiveness through their investments in basic and advanced technologies and an expansion of business portfolio.
Enterprises use innovation as a strong weapon to cope with China’s downward economic pressure through: (1) completing R&D system with continued investments; (2) integrating innovation resources throughout global industry chain. Industry leaders developed their open R&D platforms, through which raw materials and key parts suppliers can be involved in R&D and design, thus reducing R&D cycle and boosting cross-boundary ideas; (3) increasing the supply of high performance products; (4) automating and smartizing manufacturing while improving management level through lean manufacturing; (5) updating operation pattern through the integration of online, offline and more distribution channels.
Chinese home appliance players are going global. After years of development, Chinese brands, such as Haier, Gree, Midea, Hisense, have expanded their presence and recognition globally. They redefine “made in China” through their efforts and performance. Fueled by China’s proactive foreign plan, this previous export-reliant industry is exploring its new global path.
Haier bought GE’s appliance unit in the first half of 2016, and integrated its R&D and distribution channels with Haier’s. This consolidates Haier’s global position and is expected to play a big part in Haier’s further global deployment. Midea bought Toshiba’s white goods unit and took over robot maker Kuka in 2016. China is expected to benefit from more opportunities emerging from changes in global home appliance industry, and is set to go global with refined strategies.
Chine’s home appliance industry is set to forge ahead amid changes in global political and economic uncertainties
Exposed to complicated global political and economic uncertainties, China’s home appliance industry might not see positive export to come in 2017. But a pickup in domestic property market, a stable domestic demand and a growing trend of consumption structure upgrading create an enabling domestic environment.
As a bridge connecting different parties in the industry, CHEAA keeps a close eye on changes in domestic and international politics and economics, offers advisory and warning to its membership, and reflects industry dynamics to the government, in a bid to advancing industry development.
To cope with the uncertainties in domestic and international markets in 2017, CHEAA pays an increased attention on its research of global industry landscape and trading environment. And it will continue its efforts in advancing technology exchange through its annual Technical Conference, stepping up its standardization work through its involvement in the formulation and revision of domestic and international standards, and driving up environmental protection through collaboration with Ministry of Environmental Protection of China and international organizations in refrigerant replacement.
Appliance & electronics World Expo (AWE) 2017, organized by CHEAA, is set to open at 8 exhibition halls of Shanghai New International Expo Center March 9 to 11, 2017, covering an exhibition area of 110,000 square meters. AWE 2017 expands its portfolio beyond home appliances to include emerging fields, such as consumer electronics, smart home, environment and healthcare, and technology, in a bid to create a global industry gala that sets the trend for global industry.
Under increased cost pressure, home appliance enterprises must improve efficiency and upgrade products. As the ’80s and ’90s generations grow up and middle class swell up, a trend of high-end, stylish, personalized, diversified products emerge. Along with consumers’ urgent demand for “good products”, this creates great market opportunities.
Consumption upgrading, technological innovation and quality reform are expected to be the new drivers of China’s home appliance industry in the coming 2017, while the industry remains its efforts in industry transformation and upgrading.
China’s home appliance industry deepens its technological reform, transferring its growth driver from scale to efficiency. Alongside changes brought by smart manufacturing, this industry is gradually changing from mass production to mass customization, ushering into a new era of modern manufacturing industry.
China home appliance industry is set to forge ahead in 2017 amid all uncertainties, and visions a promising future that is expected to come along with next consumption cycle.