Source: CHEAA

China’s economy has experienced a rebound in 2023 thanks to the smooth transition of China’s COVID-19 response and stimulus policies issued to stabilize economy, but the recovery of durable consumer goods consumption including home appliances has been lagging. As to overseas markets, the pressure facing China’s home appliance exports persisted due to the tightened monetary policies of developed economies and the increased uncertainty in global economic growth.

Domestic Market

From January to July 2023, revenue of China’s home appliance industry stood at 1067.3 billion Yuan, up 7.67% YoY, and profit of it made a double-digit growth, reaching 83.18 billion Yuan. Year 2023 marks the recovery of China’s home appliance industry. The optimization of China’s COVID-19 prevention and control measures in early 2023 has been expected to fuel the recovery of China’s domestic home appliance consumption. The H1 reports of listed companies add to signs of rebound, showing a notable recovery of profit of white goods, and a growth of revenue of kitchen appliances and portable kitchen appliances on a month-on-month basis.

For the first seven months of 2023, the output and shipping of major home appliances including air conditioners, refrigerators and washing machines saw a significant rebound. Among portable appliances and kitchen appliances, vacuum cleaners, electric ovens, roasters, grills & bakeware as well as electric fans saw a continued slight decline in output from January to July while range hoods, electric water heaters and gas water heaters experienced a single-digit rise.

Domestic sales picked up from January to July 2023. According to All View Cloud, retail sales of China’s home appliance market (excluding 3C products) stood at 459.8 billion Yuan for the period, up 2.5% YoY. White goods (including refrigerators, washing machines and air conditioners) saw a slight recovery in overall retail sales, of which air conditioner sector stood out, making a double-digit growth in retail sales value. The strong sales of air conditioners shored up the overall home appliance market. Kitchen appliances recovered at a slow pace, with most sectors experiencing a slight fall in both retail sales value and volume YoY. Portable kitchen appliances saw a rise in retail sales volume but a fall in value. The performance of emerging home appliances was not strong.

In recent years, domestic home appliance consumption shows an obvious slowdown and a polarizing trend. On one hand, the upgrading trend of home appliance consumption maintains with sales of high-end products on a rise even amid the pandemic. Consumers’ demands for personalized products, and built-in products that perfectly integrate with their decoration styles rise. On the other hand, consumers’ sensitivity to prices also increases after the pandemic. Entry-level products perform better than mid-to-high-end products by retail sales at online markets, according to All View Cloud.

Export

China’s home appliance exports have been under pressure since the beginning of the year due to weakening overseas demand, insufficient orders, as well as factors such as the base effect, inventory destocking cycle, and the transfer of production capacities from China to overseas facilities. From January to July 2023, China’s household appliance exports amounted to 58.34 billion US dollars, a YoY decrease of 3%. Among them, exports in the first quarter decreased by 5.2% YoY, and exports in the second quarter increased by 1.1% YoY.

From January to July 2023, the monthly export performances of major home appliances and portable home appliances varied but the exports of both categories have been on a continued rise by volume but extended the decline by value. Among major home appliances, most sectors saw an improvement in export performance, gradually achieving growth by export volume. The washing machine sector and electric water heater sector maintained their strong performance. Among portable home appliances, many sectors narrowed their slump while personal care sector and clothes care sector kept standing out in performance. The sagging performance of component exports that started from Q4 of last year persisted.

The export performance of China’s home appliance industry to different countries and regions varied in the first seven months of 2023, with a narrowed drop in exports to the EU and the UK, an extended decline in exports to the US, Japan and Australia/Canada, and a continued rise in emerging economics including the ASEAN countries, the BRICS, and West Asia/North Africa. The BRICKs maintained a leading growth rate.

The globalization of Chinese home appliance enterprises has been on for more than 20 years, during which their global marketing systems and global business partnerships have been gradually established and refined and their overseas revenue has been increasing year by year. Currently, emerging countries such as ASEAN countries, Middle and Eastern African countries and South American countries have become important investment options of Chinese home appliance enterprises when they face stiff challenges in global expansion due to high inflation and declining demand in Europe and America.

Outlook

The sustained recovery of China’s home appliance industry in the second half of 2023 is full of uncertainties such as the complexity of global macroeconomic environment, weakening recovery momentum of the domestic market and the rising risks of a downturn in domestic real estate market.

Given the high penetration of traditional home appliance categories and the weaker impact of real estate cycle on home appliance industry, the industry is mainly driven by replacement demands instead of new demands, which means there still are big growth potential for emerging categories but it doesn’t seem likely to see a fast growth across the board. Currently, real estate policies have been relaxed again, but it will still take time for the real estate market to stabilize.

There are still opportunities for the development of the home appliance industry. The optimization of COVID-19 measures in early 2023 improves residents’ income expectations and is expected to lead to a natural recovery of consumption. Plus, many enterprises develop integrated products, scenario-based products and products that improve comfortableness of the environment to target the existing housing market, which achieve good results.

As to overseas market, the world economy is expected to slow the growth for a long time with the Russia-Ukraine conflict in a deadlock and the rate raising moves of central banks in Europe and America. Entering 2023, the downward trend of commodity consumption in Europe and America has not changed though their service consumption is recovering. Plus, with the production resumption of overseas facilities after the relaxation of pandemic control measures and some orders transferred to Vietnam, India and Mexico in 2022, China’s home appliance industry shrank in overseas orders. We learn from industry players that the exports to Russian and Middle Eastern countries saw a clear rise and as the inventory of retailers in Europe and America slowly picked up, the overseas demand is expected to maintain stable in H2.