Coronavirus Spurs Strategies to Increase China’s Appliance Sales

Article By : Fendy Wang

Although growth in China’s home appliance market is stagnating, there are still some reasons for optimism as manufacturers adjust their strategies...

Although growth in China’s home appliance market is stagnating (see China’s Booming Home Appliance Market Hits a Wall), there are still some reasons for optimism as manufacturers and retailers adjust their go-to-market strategies. Here are eight trends that could reboot sales of washers and dryers, air conditioners and kitchen appliances.

  1. “Smart” home appliances

Smart home appliances have become a new growth point for home-appliance retail. In the first half of 2019, China’s smart home appliance market shipped approximately 28.38 million units, a year-on-year increase of 22.8%.

Smart home appliances use microprocessors, sensor technologies, and network communication technologies. They can automatically sense their surroundings and receive residential users’ remote adjustments.

The industry predicts that in 2020, 100% of color TVs will be smart; white goods, household appliances, kitchen appliances will reach 45%, 28% and 25%, respectively; and smart home appliances will bring 1.5 trillion yuan in the next 5 years.

major appliance, China, Boost

  1. Healthy home appliances

The coronavirus epidemic has made consumers more attentive to their own health needs, and healthy home appliances have become hot. They mainly use the “disinfection” function as the selling point, such as high-temperature sterilizing air washing machines, and disinfecting cabinets with a 98% disinfection rate. To this end, Hisense launched a new central air conditioner with the functions of “heating, dehumidification, and mold inhibition.”

  1. Swapping old for new

According to the China Household Electrical Appliances Association, it is estimated that 160 million home appliances will exceed their shelf life in 2020. Among them, there are more than 37 million washing machines, more than 52 million air conditioners, more than 58 million refrigerators, more than 18 million electric water heaters, and 14 million hoods. The potential for trade-in is significant.

In addition, the Research Institute of the Ministry of Commerce reports China’s home appliance market will enter a concentrated period of renewal, and both healthy home appliances and smart home appliances will benefit.

  1. Online sales thrive

Online sales have become a key purchasing trend. During the epidemic, online consumption habits of home appliance users has increased. The industry unanimously believes that online operations are more efficient, as are payment methods, logistics, and store costs.

Tao data shows that in March, the sales of Taobao flagship stores in Supor and Jiuyang reached 0.58 billion yuan and 103 million yuan, an increase of 33% and 83% year-on-year, respectively. The sales of Xiaobao and Mofei Taobao flagship stores in March reached 0.33 billion yuan and 501 million yuan, an increase of 425% and 586% year-on-year.

Online retail methods such as mini-programs, micro-shops, and live broadcasts have received much attention during the epidemic. Among them, “Dong Mingzhu’s store” is launched in the form of APPs and mini-programs, which are highly popular.

Online sales have suddenly risen due to the epidemic, but Gree and Suning still maintain offline channels. Gree does not want to eliminate 500,000 to 600,000 sales jobs. After the epidemic improves, Gree will still stick to the offline layout.

Suning ’s “Retail Cloud” has opened 190 new stores across the country. According to Suning ’s development plan,  Suning stores will be deployed in counties, towns and rural areas in the next 10 years.

China, appliance

  1. Live streaming

The transfer of home appliances to online sales channels has become an irreversible trend, and live broadcasting has become the most popular new form of online sales for home appliance companies. Gree Electric Live Broadcasting Fest, Suning’s Super Store Broadcasting Program, and Haier Refrigerator Employee Incarnation Anchor Delivery have achieved extraordinary performance growth, and there are even some home appliance companies who have personally live broadcast the goods.

  1. Small household appliances become “sweet and sour” in seconds

Affected by the epidemic, the stay-at-home economy has made the small home appliance market extremely popular. Compared with white goods, small appliances have the characteristics of low unit price, small size, free installation, light service, and easy distribution, which minimizes the damage of the epidemic.

According to the CCTV Financial Report, during the epidemic, sales of air fryers increased by 655%, and one type of grilling machine continued to have online retail sales of more than 100% for several consecutive weeks.

There are many star enterprises with impressive performance, such as the creative small household appliance brand-Xiaoxiong Electric’s Q1 net profit, which increased by 60% -90% year-on-year. Galanz, which started with a microwave oven, announced the addition of 14,000 new jobs. The chairman of Galanz Group, Liang Zhaoxian, said that he would keep the growth target of 35% in 2020 unchanged.

  1. Cross-border, M&A

During the epidemic, there is still a phenomenon worthy of attention — M&A.

On March 20, Feike Electric announced that it had acquired a 15% stake in Pure Rice Technology and extended its business to small home appliances to improve the product chain of small home appliances, household appliances, and kitchen appliances.

On April 11, Fangtai Group released its first light kitchen brand “Mibo” and the brand’s first flagship product—the Mibo multi-function cooking machine. This is Fangtai Group’s first foray into field of small kitchen appliances.

In addition, the beauty makeup e-commerce platform-OneNet One Chuang intends to acquire the home appliance platform-Shangbai e-commerce, horizontally expanding new categories of home appliances.

Yiwangyichuang was founded in 2012 and started the beauty brand Baique Ling. Its current service brands include Baique Ling, Elizabeth Arden, OLAY, Procter & Gamble and other domestic and international big names. Founded in 2011, Shangbai E-Commerce started to serve the home appliance brand Midea. It is one of Tmall’s nine “six-star service providers” in 2019.

Shangbai E-commerce achieved revenue of 190 million yuan in 2019, a net profit of 40 million yuan.

This article originally appeared in EETimes sister publication ESMChina.

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