Source: China Appliance (run by CHEAA)
Year 2016 has witnessed an increased market share of front loaders, which contributes to a rise in average price a lot, and Chinese washer enterprises’ continued efforts in capacity improvement and product structure rebalance, as a way of getting a head start in the tide of product upgrading.
Upgrading products to reflect consumption trends
An increased market share of front loaders, large capacity-orientation, and a wider application of viable frequency technologies mark the three trends of China’s washer industry in 2016.
Chinese residents’ improved life quality is generating a strong demand for quality products. An officer from Little Swan, a sub-brand of China’s leading home appliance maker Midea, tells CHEAA-run China Appliance reporter that, more consumers are looking at washers that excel in fabric care, noise level, healthcare, environmental protection and intelligent performance. This powers the expansion of front loaders, dryers, as well as washers featuring variable frequency, large capacity and smart functionalities. Two washers for one household, as a demand of more families, offer a boost for China’s washer market to rise.
Sales of front loaders took a bigger share than top loaders did for the first time in 2016, accounting for 53% of the market in 2016 up from 47% in 2015, according to statistics from Gfk. “A continued increase in the market share of front loaders is a distinct feature of China’s washer market in 2016.” Wang Weiqing, Vice President and CSO of BSH Home Appliances (China) Co., Ltd., points out.
Jin Liang, General Manager of Refrigerator and Washer Division under Gome, a leading home appliance and electronics distributor, reveals that, sales of front loaders from all Gome’s distribution channels took an approximate 70% in 2016. Suning, also a leading home appliance and electronics distributor, witnessed an increased share of front loaders for Jan to Nov 2016. Xu Zhong, President of Refrigerator and Washer Division under Suning Cloud Commerce, believes that, “Front loaders have become the top preference of consumers in first tier and second tier markets.”
Large capacity and variable frequency also mark a clear trend. Statistics from China Market Monitor (CMM) suggest that, from Jan to Nov 2016, sales volume of washers with a capacity more than 8kg climbed to take a market share of 44% and sales of those with a capacity between 7kg and 8kg accounted for 36%, which totaled 80% of the market share. Variable frequency washers expanded its market penetration to take 47% of the market. What’s worth noticing is that variable frequency technology saw a wider application in front loaders than in top loaders. An officer from Little Swan reveals that, variable frequency technology is used in more than 80% of front loaders and around 15% of fully automatic top loaders of Little Swan.
According to LG, variable frequency products and front loaders with a capacity between 8kg and 10kg were more preferred in 2016. And to reflect this change, LG has stepped up its efforts in the market penetration of these products.
“Two or three years ago, 6kg to 7kg was the dominating capacity of front loader market. But from 2015 to 2016, 9kg front loaders witnessed a surge in market penetration, which reflects the progress of China’s ongoing consumption upgrading.” Zhou Guoxian, General Manager of Washing Machine Line of Skyworth, says.
Wei He, General Manager of Washing Machine Marketing Division of Whirlpool (China), remarks that, “Variable frequency technology is growing mature in 2016, and is expanding application to low-end markets.”
Eyeing smartness and healthcare
Looking back at China’s washer market in 2016, smartness and healthcare are no doubt the buzzwords.
Sales penetration of smart washers register 26.2%, a year-on-year rise of 11%, according to offline monitoring data from All View Cloud,
Major washer enterprises are turning bullish on smartness. Little Swan is no exception. An officer from Little Swan believes that, smartness is the future of washers. “The top priority in washer smartization is technology innovation, so that functions including automatic drop and IoT mobile control can be a possibility”
Smart technologies are increasingly applied in washers to achieve smart control, smart detergent dispenser, smart vibration elimination and more. Xie Hui from Samsung remarks that, Samsung values smartness for humanity as one of its three core values, together with technology innovation and originality. “Smart functionalities are designed to serve consumers’ daily life. And it can really offer convenience for consumers only when it’s integrated into real life scenarios.”
Smartness will be meaningless if it’s not designed as a practical solution, Wang Weiqing from BSH says. He believes that, smartness of washers involves two aspects: smart sensors and functions, and connectivity to the Internet, which allows remote control and time management.
China Appliance reporter has leaned that, Haier’s wash & care sector has long been transferring from a “hardware seller” to a “solution provider”. Built on its smart wash & care eco system, Haier’s wash & care sector adopt a consumer-centered open innovation operation. And through an integration of its global resources, it offers healthier and smarter wash & care solutions for users.
LG’s “Tag On” function allows users to download and set up washing programs anytime through a NFC-enabled mobile phone to satisfy their customized demands. And its Smart ThinQ technology allows users to monitor water consumption through a smart phone.
Healthcare has become one of the top concerns of users as life quality improves. Year 2016 has seen words like “dirt free” “self-cleaning” frequently mentioned in washer market. Jin Liang from Gome notes that almost all washer enterprises are promoting the idea of healthcare, despite their differences in approaches.
As the idea of self-cleaning spreads, more and more users realize that dirt and grime build up between inner and outer tubs, resulting in a “secondary pollution”. In 2016, Haier’s technology of “no water between tubs”, an approach to address “dirty tub” issue, was recognized as a national technological achievement and has received two national technological awards in less than 3 years.
TCL, using healthcare as a breakthrough point, strongly promotes its “dirt free” washer. According to Xi Lei, Vice General Manager of TCL, TCL received a number of international patents with its “fully closed tub structure” and “water sealed dirt free structure” in 2016, and achieves “dirt free” in its top loaders first and then front loaders too.
Better synergies with distributors
Distribution channel integration was another highlight of 2016. “Distribution is the lifeline of home appliance retail. A better control of it could give you an edge in sales, as well as in the integration of resources from your best partners.” An officer from Suning says. Another industry insider from a washer brand committed to third and fourth tier market says in all honesty that, it’s not that they don’t want to usher into first and second tier markets. But to do that, they need more expansion and accumulation of distribution channels.
Online washer market has surged in 2016. According to statistics from All View Cloud, in the past 2016, online sales volume of washers registers 10.93 million units, a year-on-year increase of 44.8%, and online sales registers RMB 15 billion Yuan, a year-on-year increase of 47.2%. “Joint ventures are stepping up their efforts in online markets with increased investment put into product deployment and marketing, which boosts their online sales significantly and brings out an optimized distribution structure.” An officer from JD.COM says.
It is learned that average online washer price is slightly lower than the average price of the industry. Cost-effective products are offered for lower middle income consumers through online channels, thanks to lower online operation cost and rebates to retailers. Offline market, not to be outdone, also see a year-on-year increase in per customer transaction as front loaders, especially high-end, large capacity, washer/dryer combos expand their presence. An officer from LG introduces that, despite its continuing efforts in offline channels to keep its edge, LG is expanding in the Internet channels as a way of rebalancing its distribution channels.
Offline channels, compared to online, put more weight on consumer experience. “For Gome, better consumer experience at stores is what we treasure as a necessity and what we’ll always be improving.” Jin Liang from Gome says. An officer from Suning gives us same remarks on this, saying that, consumers still cares about on-site experience very much as they buy washers, and many prefer offline stores for better communication with sales personnel. “An integration of online and offline, visual and life experience is ongoing, and a platform integrated with multiple O2O channels has seen clear advantages.”
New products are previously rolled out by manufactures with no involvement of distributors. In 2016, Gome, in cooperation with Haier, organized a product release conference which took consumers as target audiences. And this operation was later adopted by more brands and received strong results. “As a distributor, Gome will also embrace excludable products.”
In collaboration with manufacturers, Suning first released in 2016 Haier’s Hello Kitty washer series, Little Swan’s Marvel washer series, LG’s steam washers, Samsung’s eco bubble washer series, Electrolux’s mini washer series and TCL’s self-cleaning washer series.
Dryers all positioned to boom
In our interviews, Wang Weiqing from BSH speaks highly of his dryer at home. And he’s not alone. In fact, dryers and washer/dryer combos are all flexing muscles in China’s clothe dryer market.
Year 2016 saw a clear rise in China’s dryer market. Statistics from All View Cloud suggest that, sales volume of dryers registers 156,000 units in 2016, a year-on-year increase of 53.2%, and sales posts 500 million RMB, a year-on-year rise of 65.3%. All View Cloud estimates that, dryer market will continue to rise in 2017. Jin Liang from Gome reveals that, Gome has seen a 150% rise of sales of dryers in 2016.
China Appliance reporter has learned that, penetration rate of dryers in China is less than 1%.
BSH is the top sales leader in China’s dryer market. An officer from All View Cloud reveals that, dryers of BSH took a market share of 70% in 2016. Despite BSH, Haier, Little Swan, Panasonic and Beko are also active players in this market. “Most enterprises prefer to place washer/dryer combos into Chinese market rather than independent dryers.” Jin Liang from Gome reveals.
Washer/dryer combos play a big part in China’s dryer market. Xie Hui from Samsung tells China Appliance reporter that, “washer/dryer combo is the biggest contributor to the leading position of front loaders. And it has seen rapid expansion in China especially in China’s Guangdong and Jiangsu provinces.” Statistics from JD.COM suggest that, washer/dryer combo is all set to storm the market with a year-on-year increase of five times in sales.
What’s worth noticing is that, both combos and dryers have their challenges to face in Chinese market. Dryer makers must tackle the issues of “small size bathroom” and “high price”, while combos must improve its drying performance and drying capacity.