What is the impact of the power rationing policy on the home appliance industry?

Appliance&electronics World Expo (AWE) in 2022 will be held in Shanghai New International Expo Center from March 17 to March 20, 2022.As the industry vane, AWE not only guides the development trend of industrial products, but also guides the transformation of life style, providing a precious opportunity for domestic and foreign home appliances and consumer electronics enterprises. Enabling the supply and demand sides of home appliances and consumer electronics to communicate in close proximity is a platform to show innovation results to consumers and capture their needs and pain points.


Background of power rationing policy

First of all, due to the epidemic, a large number of orders poured into China, and the manufacturing industry, especially small and medium-sized enterprises, expanded capacity and production, leading to a significant increase in electricity demand. According to the National Bureau of Statistics, from January to July this year, the index of new orders in the manufacturing industry kept expanding. Second, the risk level of the epidemic in China has decreased, and the service, catering and tourism industries have improved. Although the economic level has recovered rapidly, the pressure of electricity consumption has increased at the same time. Thirdly, in order to cope with the autumn and winter heating, the reserve demand for coal in various regions increases, and thermal power generation in China accounts for 70% of the total, resulting in a shortage of coal for power. The price rose from 500 yuan/ton in May this year to 1400 yuan/ton in September, and the pithhead price broke through 2000 yuan/ton in mid-October. Finally, the state has also put forward policy constraints. The "14th Five-Year Plan" proposed binding targets for energy conservation, promoting the realization of "carbon peak", "carbon neutral" and assessment of energy consumption.


In this context, various regions, especially high energy consumption areas, according to the actual situation of power limit. Take Guangdong province, a big manufacturing province, as an example, many places in the province implement "open three stop four" or even "open two stop five".


1. From the regional perspective, peak shift power consumption or power supply limit should be started in high energy consumption areas.

Household appliances do not belong to the industry of high energy consumption, but shandong, Jiangsu, Zhejiang, Fujian, Guangdong, Anhui and other large household appliance manufacturing provinces are among the provinces of power restriction. Although it can be adjusted by night shift or off-peak, the scale will still be affected to a certain extent.


2. From the perspective of enterprise scale, large enterprises enjoy certain policy preference, while small and medium-sized enterprises have increased pressure on electricity consumption.

Upstream raw material suppliers have concentrated orders, but their production capacity is limited, production cycle is prolonged, and order delivery lags behind. Large, medium and small household appliance enterprises are affected. But in contrast, large household appliance enterprises have a certain advantage. While enjoying preferential power consumption policies, they can transfer their production capacity to unrestricted or low-capacity factories by virtue of their own scale advantages, and actively layout overseas markets to reduce the production impact. Secondly, in the energy management also actively layout, early energy management, or own power generation equipment or through acquisition to meet the production needs of power rationing. And small and medium-sized enterprises due to the degree of automation, the daily production time is shorter, capacity can not continue to release, coupled with increased labor cost pressure, facing a more serious situation.


3. From the perspective of enterprise types: the whole machine enterprises are relatively less affected, while supply chain enterprises are struggling.

Raw material order delivery time to extend the lead to product manufacturing materials not ready, the first time for the machine had a greater influence on the enterprise production, but relative to the smaller supply chain and have give priority in the advantages of raw materials, combined with the production line of intelligent renovation of large, time early, there has been marked progress in saving energy and reducing consumption, lower overall production effect. Supply chain enterprises are also affected by the double impact of prolonged delivery time of raw materials and insufficient scale, and their capacity is severely limited, leading to the market share of small and medium-sized household appliance brands being harvested by the head brands.


4. From the category: the sales scale of products has not been significantly affected.

In terms of market sales, the sales scale of household appliances has not been significantly affected by the power restriction policy. In September and October, the sales of air conditioning products are in the off-season. With the arrival of heating season, the electricity consumption gap will be further increased. The subsequent changes of the market need to be further observed. This round of power restriction policy is like a pain for home appliance enterprises. In the short term, production scale may decrease, inventory will decrease, sales channel stock volume will decrease, and market share will be lost. But in the long run, the benefits still outweigh the disadvantages.


From the overall perspective, we will promote the transformation of the domestic economy, accelerate the elimination of backward production capacity, and avoid overcapacity in the domestic manufacturing sector. For the home appliance industry, more enterprises will be forced to transform and upgrade, and the home appliance industry will be promoted to green, low-carbon and intelligent transformation. Small and medium-sized enterprises with low technological content and weak risk resistance will be eliminated at an accelerated pace. More household appliances will be transferred to high value-added products, and reduce the production and sales of low value-added products; The industry will return to the benign competition track of "value" and comprehensive strength; Finally, it will give users a better product experience.


Appliance&electronics World Expo (AWE) adheres to innovation and change, and has achieved continuous breakthroughs in scale, quality and global influence. It is one of the three top home appliances and consumer Electronics exhibitions in the world. For more information on the exhibition, welcome to the site of AWE 2022.