Appliance industry faces diminishing effect of inflection point policy

The home appliance industry has been losing ground to the outside world.

Following the end of the air-conditioning energy-saving subsidies at the end of May, the policy of home appliances to the countryside has also gradually come to an end - the first batch of home appliances to the countryside in Shandong, Henan, Sichuan, and Qingdao will be due to expire in November this year. Other regions will be Expires in November next year.

In the case of diminishing policy effects, statistics from the Ministry of Commerce on household appliances to the countryside showed that sales in April decreased by 31% year-on-year, and only slightly increased by 0.9% year-on-year in May.

Perhaps the turning point has come.

Slowing growth

"As far as I know, some second- and third-tier brands' sales volume has fallen by 20% to 30% this year, and the pressure is very great." Hong Shibin, deputy director of the China Home Appliances Commercial Association Marketing Committee, said in an interview.

According to statistics from the Ministry of Commerce, in April this year, sales of home appliances to the countryside were 3.298 million units, a year-on-year decrease of 31%, while in March sales were 14.715 million units, a huge drop. May sales were 5.78 million units, an increase of only 0.9% year-on-year.

The “White Paper on Domestic Major Urban Refrigerator Market” jointly issued by the National Information Center and China National Grid in late May shows that the sales volume of refrigerators in key domestic cities in the first quarter of this year was 4.35 million units, an increase of only 8.24% year-on-year, much lower than last year. The same period. According to the analysis, the decrease in policies and the rapid increase in the number of refrigerators in urban areas have been the main reasons for the decline in refrigerator sales growth.

Hong Shibin believes that the time has come for the washing machine market to begin shuffling. Previously, under the stimulation of various favorable policies, the production capacity of washing machines expanded rapidly. It is estimated that by 2015, the annual output of washing machines in our country will exceed 100 million units. However, according to the industry’s most optimistic estimate, the market capacity will be only about 80 million units, and the supply exceeds demand. The situation is clear.

“The implementation of home appliances to the countryside led to the consumption of home appliances in the rural market. The successful washing machine brand reached 102, prompting the rapid expansion of the washing machine industry in the past two years. If the related policies are terminated, the consumption of rural household appliances will inevitably shrink. In order not to lose this market, the competition between each other will intensify, and price wars, technological innovations, and service upgrades will become the norm.” said Hong Shibin.

Increased elimination

In Hong Shibin's view, the market capacity will not be enlarged indefinitely, and each company is emphasizing growth, which will inevitably lead to the elimination of enterprises with weaker competitiveness. "The second and third line brands will be very painful this year," said Hong Shibin.

Ovid Consulting analyzed that the implementation of home appliances to the countryside has created opportunities for some regional SMEs, but with the weakening of the effect of home appliances to the countryside, the industry’s leading sales network in the 3rd and 4th markets, SMEs and excessive Enterprises that rely on home appliances to the countryside face greater challenges.

In fact, the intentions of home appliance giants such as Midea and Haier to seize the rural market are very obvious. According to statistics, Haier Washing Machine has established 2,200 post-sales outlets nationwide and the after-sale coverage rate has reached 100%. Next, Haier is also preparing to establish 60,000 village-level service stations nationwide. The United States has exceeded 10,000 refrigeration stores in the country, and is still expanding to the third and fourth line market.

Hong Shibin said that at present, the home appliance industry is characterized by group warfare and comprehensive strength. This will result in stronger and weaker weaker companies. The sinking of industry leading companies will make the operation of second and third tier brands more and more difficult. However, this is beneficial to the healthy development of the entire home appliance industry.

Ovid Consulting analysis believes that in the next 3 to 5 years, the reshuffle of the home appliance industry will intensify, and the industry may experience greater mergers and acquisitions.