China Large Appliances Market Forecast to 2020: Ken Research
How China Large Appliances Market Is Positioned?
Large appliances are considered as
durable consumer goods which have varying replacement rate depending on type of
appliance and user experience desired. It is a very dynamic market and
continuous innovation is required to make the products more economical and user
friendly.
It was reported that urban households
in China own ~ television sets, ~ washing machines, ~ refrigerators and ~ air
conditioners per 100 households. Urbanization in China was at ~% in 2015 which
translates into ~ million people living in urban locations. Living conditions
of rural population is also improving as an investment in infrastructure has
helped in better connectivity and living conditions of people. There is
significant rise in the ownership of large appliances in rural areas especially
air conditioners and refrigerators. It has increased from ~air conditioners in
2010 to ~ air conditioners and ~ to ~ refrigerators per 100 household in rural
areas in 2014.
Demand for large appliances in China
is mainly driven by replacement of existing old products with new ones. Demand
for large appliances has increased from ~ million in 2010 to ~ million in 2015
registering a CAGR of ~%. In terms of revenue market has increased from USD ~
billion in 2010 to USD ~ billion in 2015 registering a CAGR of ~%. Programs
like Go rural subsidy, subsidized trade in home appliances, launch of energy
saving products has helped large appliances companies to make substantial sales
increase in 2011. Volume sales increased from ~ million in 2010 to ~ million in
2011.
The sales of large appliances during
2013 witnessed launch of many smart consumer appliances which became the major
growth driver especially driving the replacement demand. This helped the large
appliances market to register a positive growth rate of ~% in 2013. Programs
like go rural have helped to develop sales network in rural areas which has
benefitted the market in 2013 and years after.
What have been the Major Segments that has Driven
Change
Demand for refrigerator has risen
initially in 2011 but after that continuous decline was registered in sales
volume. Sudden rise in demand for refrigerator in 2011 was mainly due to demand
coming from rural areas especially on account of subsidy offered which started
in 2009.
Majority of the demand for
refrigerator in urban areas was witnessed for larger size refrigerators with
multiple doors, energy saving rating and other added features. Average size of
the television being demanded in China has registered a consistent increase.
The demand preference has increased in first quarter of 2012 from 37.8 inches
to 45.3 inches in first quarter of 2016.
Demand for television was mainly driven
by replacement with high end technology products. For instance, CRT TV is not
manufactured by any major TV manufacturing company in China. Consumer
preference has changed to LED and Curve television with many other added
features. Television market in china was dominated by Skyworth, Hisense, TCL,
Changhong and others. Top three companies have accounted for a revenue share of
more than ~% during 2015.
During 2015, around ~ million
washing machines were sold with an aggregate value of USD ~ million.
Replacement demand for existing
washing machines was the major reason for growing demand for washing machine.
Replacement demand has accounted for more than ~% of total domestic sales of
washing machine in China during 2015.
Market demand for new technology based
air conditioners was on the rise in 2015. Retail sale of artistic high end
intelligent air conditioner accounted for ~% sales volume in 2015 registering
year-on-year increase of ~%. Sale of new air conditioner to replace existing
air conditioner accounted for approximately ~% of total sales in 2015. Distribution
and sales network for large appliances has evolved over a period of time. More
and more companies are focusing to create a centralized distribution network to
reduce inventory and give better consumer experience by promoting timely
delivery and installation. Companies such as Haier have separate logistics
company to handle distribution and sales network of large appliances in China.
Which Large Appliances are Majorly Preferred by
Chinese?
With ever improving technology and
picture quality, demand for large screen television is on the rise. The demand
for television with size greater than 45 inches has consistently increased
during the period 2012-2015. Decline in final price of the television has
helped to augment the market for large screen size. Reduced thickness achieved
with improvement in technology has reduced the space occupied and is also the
very important reason for the increased replacement demand for CRT TV in urban
cities where personal space is in limited quantity.
With rising purchasing power of
consumers in China, the demand for high end technology and large volume
refrigerators has increased. The volume share of multi-door and bi-fold
refrigerators has showcased an increase with share increasing from ~% in 2011
to ~% in 2015.
The companies are launching smart and
efficient refrigerators with advancement in technology through consistent
product modification. There has been substantial decline in product demand for
low cost machine mainly due to smaller capacity and demand for high end and
automatic and smart machine. From macroeconomic perspective, rising
urbanization and high per capita income in urban areas has led to increase in
demand for high end and costly refrigerators as they are technologically more
advanced and have high capacity.
Demand for pulsator type or front
loading washing machine was on the rise on account of its efficiency and
reduced water consumption and faster cleaning. These positive attributes have
contributed significantly to growth in share for pulsator type washing machine.
Rising demand for energy efficient and increased scarcity of water has promoted
the sale of roller type washing machine.
Increased demand for energy efficient
and low water consuming washing machines has promoted the sale of more expensive
roller type washing machine. Increased demand for these products has led to
increased share of products which are priced above RMB 3,000.
Front loading washing machines have
shown continuous increase in demand on account of its high efficiency and low
water consumption.
The share of front loading washing
machine have increased significantly over the years with market share rising
from ~% in 2013 to ~% in 2015. Most of the new washing machine launched in
China market is of front loading type. Top loading machines still dominate the
market owing to their low prices.
Focus on energy efficient products has
led to increased demand for inverter type air conditioners (frequency
conversion) which are more efficient and consume less power compared to normal
air conditioner. These air conditioners being energy efficient products, saves
a part of the cost on electricity bill this saving on electricity bill promotes
the consumers to invest in energy efficient air conditioners. Over the years,
the volume share of frequency conversion type air conditioner has increased from
~% in 2011 to ~% on 2015.
Air conditioner is high priced product
with majority of demand coming from products priced above 3,000 RMB. In 2015, ~%
of the demand for air conditioners was originated from products priced above
RMB 3,000 demand for high priced
product. This was mainly on account for better and more energy efficient
products. Demand for air
conditioner was mainly reported from urban areas where per 100 household
ownership was reported at 107.4 in 2014.
How
the Logistics is Handled for Large Appliances by Online Companies in China?
Most of the manufacturers have their
own logistic system and they use their services for supply to warehouse and
delivery at location of whole-sellers, retailers and exclusive stores. Fully
developed logistics system is necessary to cut down on inventory and ensure
faster delivery in very competitive market.
Midea group
consolidated its internal and external social logistics resources, improving
its overall capability to provide logistical solution. It launched an
integrated logistic system covering 17 provinces and cities nationwide,
initially completing the construction of a highly efficient end to end logistic
system from storage, trunk routes and branch transport to the last kilometer
delivery.
Haier has started a new subsidiary
to handle its logistics requirement for supply of large appliances and ensure
proper integration of online and offline sales. In 2015, ~ self-built
warehouses were constructed adding up to a total of ~ self built warehouses.
The operations in 3rd and 4th tier cities were still in development phase and
need excellent logistics network to fully integrate these areas to the main system.
HUB coverage was expanded to further enhance the delivery speed to villages and
to doors in 3rd and 4th tier markets.
Other major companies manage their
logistics through parties depending on their needs and region they target. Many
companies include logistics cost as part of their operations. Companies also
maintain good relationship with large retailers to tap the tier1 and tier2
cities. In tier3 and tier4 cities they rely on flagship stores, exclusive
shops, and other traditional and nontraditional methods for effective delivery
of products to the consumer.
Key Factors Considered in the Report
§
Comprehensive analysis of China Large Appliances Market and its segments
§
Listed major players and their positioning in the market
§
Identified major industry developments in last few years and assessed
the future growth of the industry
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Large Appliances Market of China with their Products
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Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
+91-9015378249
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