Source: CHEAA-run China Appliance magazine
Washing machine industry embarks on an upgrade in all respects to reflect the changing consumption demands while ease the pressure brought by rising raw material cost after a struggling recovery in 2021. At the current stage, a war over value instead of price has been on.
A mid- and high-end strategy
The industry saw a rise in both domestic and export performance in 2021 with the combined domestic retail sales value of washing machines hit the 70 billion Yuan milestone after a struggling 2020. Omnichannel data from All View Cloud show that omnichannel retail sales value of washing machines reached 76.6 billion Yuan in 2021, up 7.3% YoY, and omnichannel retail sales volume 37.18 million units, up 0.8% YoY, of which online retail sales value 40.8 billion Yuan, up 18.1% YoY, and offline retail sales value 35.8 billion Yuan, down 2.9% YoY. Speaking of the rise, my interviewee from TCL credits it to the well containment of the pandemic that allows for the free movement of people and the launches of marketing campaigns.
Brand wise, Haier and Midea remain steady at the top with other brands following behind. Foreign brands saw a recovery while domestic brands achieved an overall rise of market share. It is learned that Panasonic saw its market share up 0.24% in 2021 due to its long-term R&D in high-end market and its grasp of the market opportunity brought by tumble dryers and washer dryer combos. Brands under the umbrella of Haier stood out with a rise of 3 percentages in market share, according to All View Cloud.
Export wise, the export volume of washing machines from China came to 21.91 million units in 2021, up 1.7% YoY, and export value 20.19 billion Yuan, up 9.0% YoY, according to customs data. Q1 stood out with the export volume and value of February alone up 171.1% YoY and 189.2% YoY respectively. The growth of export value turned negative entering H2, but returned to positive in Q4. Given the current uncertainties, most interviewees keep a wait and see attitude towards the export market development down the road, and believe it takes time for the export market to recover.
Driven by the rising raw material cost and the upgrade of product mix, washing machine market saw a transition from price war to value war. As China’s home appliance industry gets more and more dependent on the existing market, washing machine sector also hits a plateau with no groundbreaking techs or innovations made, which leads to homogeneous products and rounds of price wars. To deal with it, industry players step up their efforts into the development of mid- and high-end markets.
My interviewee from Haier unveils that, Haier stood out with a market share of 43.5% by retail sales value of washing machines in 2021, and its high-end brand Casarte took a whopping 74% of the market of washing machines charged over 10,000 RMB.
The upgrading of products
The pandemic drove up the washing machine sales from online market to account for 53.2% of the market. But brick-and-mortar sales is expected to recover as the high-end strategy kicks in.
It’s worth noting that washing machine brands ride the wave of live streaming sales and make marketing campaigns through live streams, short videos, trending topics on Weibo and cross-boundary cooperation to stay close to consumers, deliver their innovative tech, high-end products, premium experience, and brand philosophy to them. Speaking of cross-boundary cooperation, my interviewee from Midea points out that home furnishing market, project market, content operators and the brand’s own platforms are key channels that might drive the market to grow down the road.
According to Report on Washing Machine and Dryer Market Trend 2021 from China Market Monitor, quality life is a common pursue of consumers who are now mainly made up of the 80s, 90s and Gen Z. And washing machine market is experiencing a clear upgrade of consumption with high-end products leading the sales. Tumble dryers and washer-dryer combos gain popularity and become the main drivers of the market growth.
The expansion of front loaders attests to the trend too. In 2021,10kg+ front loading washing machines expanded in market share to account for nearly 60% of the whole market, 55.4% of the online market and 62.9% of the offline market, according to National Household Appliances Industry Information Center (NAIC).
My interviewee from TCL sheds light on the popularity of front loaders, and attributes it to the better user experience front loaders offer and the rise of dual washers that allow consumers to wash two loads of laundry at once.
Speaking of the price rise, he believes it is more of a result of the high-end trend of the industry despite the influence of the pandemic, and the high-end trend reflects the current demands of consumers in products, user experience, quality, and service.
The trend towards the development of high-end, smart, and targeted products
The cost pressure crept up on every link of home appliance chain in 2021. To deal with it, home appliance players made efforts in the standardization of materials and the replacement of materials, new product development and targeted marketing to promote sales aside from their high-end strategy and their price and volume lock moves to ensure profit margin.
The industry is upgrading in all aspects in 2022.
“The common direction of the industry, with no doubt, is the development of scenario-based products and specialized products. Healthcare is also a concern of consumers. This points to the base ground of growth which is core technology. Haier will continue its dedication in the innovations in emerging categories, healthcare, scenarios and specialized products in 2022.” My interviewee from Haier says.
My interviewee from Whirlpool also highlights the concept of a healthy home and the company’s healthy, smart, energy-efficient and environmentally friendly solutions.
The development of personalized products and intelligent products is also a trend of the industry. The application of AI and IoT is expected to power the development of smart washing process.
The industry is seeking for innovations and changes to upgrade and is expected to make progress while maintain steady growth in 2022.