Source: China Household Electrical Appliances Association (CHEAA)
China’s home appliance market was severely affected by the outbreak of Covid-19 in the first half of 2020. With Covid-19 gradually contained within China and consumption stimulus policies implemented, home appliance manufacturers actively adopted adjustment measures to resume production and sales while market demand picked up. At the same time, exports of China’s home appliance industry experienced a V-shaped rally thanks to its complete industrial chain.
Economic indicator picked up steadily to reach the same level as last year
China’s home appliance industry posted revenue of 1.48 trillion Yuan in 2020, down by only 1.06% year-on-year, and profit of 115.7 billion Yuan, down by 5.61% year-on-year, according to National Bureau of Statistics. The overall performance has been rising since April, which compensated for the loss of the first quarter.
As to breakdowns by category, refrigeration industry (including refrigerators and freezers) recovered fast; air conditioner industry was weak in performance as an installation-needed category affected by a cool summer; beauty and health care industry and kitchen appliance industry achieved positive growth during the pandemic. The performances of different categories reflect consumers’ stay-at-home lifestyles during the pandemic.
With air conditioner category as an exception, large appliances including refrigerators, freezers and washing machines turned positive in output growth, according to National Bureau of Statistics. The output growth of refrigerators and freezers mainly came from surging overseas orders. As to portable appliances, categories with high percentage of overseas orders such as vacuum cleaners, electric ovens & grills and microwave ovens saw a jump in output.
Retail market saw fast-growing online performance and smaller market segmentation
Retail market of China’s home appliance industry shrank slightly in size in 2019 due to the slowing growth of macro economy, tightened real estate policy, and the transition of China’s large appliance market from new demands as mainstream to replacement demands as mainstream. Entering 2020, the market got worse under the sudden outbreak of coronavirus with retail sales in Q1 down by nearly 40%. As coronavirus got contained domestically, the market demand rallied gradually. As a result, the yearly retail sales value of the industry came to around 708.3 billion Yuan with the shrinkage narrowed to 11.1% year-on-year, according to All View Cloud.
When it comes to breakdowns by category, large appliances suffered an overall fall except for refrigerator category which maintained the same level as last year, while portable appliances for daily use saw rising demands during the outbreak. In the first half of 2020, cooking appliances such as air fryers and grillers, cleaning appliances such as vacuum cleaners and electric mops, and personal care appliances such as electric hair clippers and massaging appliances, sold in huge numbers during the outbreak, and maintained a double-digit growth as of the end of the year though fell slightly in the second half of the year. It’s worth noting that, dishwashers stood out with a 25% growth year-on-year in annual sales value.
Retail market has shifted to a new pattern with online market taking the lead and offline market as a compliment in this special year, according to All View Cloud. Even for installation-needed large appliances such as air conditioners and electric water heaters, online market took a share of more than 50%.
Plus, promotion activities initiated by local governments in hands with distribution channels and manufacturers in the second half of 2020 also boosted the home appliance market though the subsidies were limited.
Export market saw export value exceed 80 bn USD thanks to complete industrial chain
Exports of China’s home appliance has been rebounding strongly since June 2020, with yearly export value of 83.7 billion USD, a historic high, up by 18% year-on-year, the fastest growth in nearly a decade.
The strong growth is correlated with the pandemic. With the pandemic spreading over the globe, many major importers of China’s home appliance industry suffered. The stay-at-home lifestyle and the broken supply chains across the world brought an opportunity to the exports of China’s home appliance industry, particularly the exports of refrigerators and freezers. Plus, manufacturers’ efforts in expanding in ASEAN markets, targeted policies from the government to stabilize trade situation, and the fast development of cross-border e-commerce and overseas e-commerce all play a positive role in the growth of exports.
As to breakdowns by category, large and portable appliances maintained the rising momentum of exports starting from Q3 and the growth rate has been on the rise. Exports of components stayed at the same level as last year. Region wise, exported home appliances from China to Asia, Europe and North America set a historic high; exported home appliances from China to Latin America improved and to Africa turned positive for the first time.
Outlook for 2021: domestic market is expected to achieve restorative growth and export market to resume normal state
In the end of 2020, the epidemic got well contained in general despite several cases of reports in some places, which laid a steady macro-economic base for the development of home appliance industry in 2021. In early 2021, the epidemic spread in some regions. But with covid-19 vaccines put into wide public use, the macro economy as well as consumption is expected to further recover in the second half of 2021. Compared with the chaos in early 2020, there is expected to be a clear restorative growth in the first half of 2021. But it should be noted that with high market penetration, limited new demands and weak consumption passion of domestic consumers, the industry doesn’t seem likely to see a broad rise that covers all product categories and on all platforms. But there is a high chance of restorative growth in traditional categories and fast growth in emerging categories.
The new growth mainly comes from two engines. On one hand, consumption upgrade will unleash more benefits to the industry. High quality, high-tech new products such as dishwashers, clothes dryers and integrated kitchen products, particularly packaged products and scenario-based products, will be a strong engine. On the other hand, it is widely believed that year 2021-2020 will be a peak time for real estate completion, which could bring benefit to home appliance industry.
Given the pandemic containment situation worldwide, home appliance enterprises should keep a constant eye on the changes of monetary policies at home and abroad and price changes of raw materials.
Exports to overseas markets show strong resilience in general amid the pandemic. As one of the earliest countries resumed production throughout the industry chain, China took overseas orders and offered steady supply of home appliances to overseas consumers, which shows its advantage in industry chain.
The strong export performance mainly comes from surging overseas demand. The pandemic does not seem likely to get effectively contained worldwide in the first half of 2021, which means the large demand will remain in the short term. But with vaccines widely used in developed countries, the pandemic might gradually get contained in the second half of 2021, which could bring the export performance to the normal level before the pandemic.