Summary of this issue:
Event: on March 23, 2022, the office of the US trade representative said that it would resume the tariff exemption of some Chinese imports. The tariff exemption involves 352 of the previous 549 pending products. This provision will apply to goods imported from China between October 12, 2021 and December 31, 2022.
Comments:
Previously, among the 549 pending products, the categories related to household appliances have basically obtained tariff exemption in the 352 tariff exemption list. Products include automotive air conditioning compressor, refrigeration compressor, air purifier, vertical freezer, floor sweeping Siasun Robot&Automation Co.Ltd(300024) , vertical vacuum cleaner, portable air fryer, etc. The products that have been exempted from tariff again have been exempted, but they all expire at the end of 2020. Relevant export products will be subject to an additional tariff of 7.5 ~ 25% from January 2021. After this tariff exemption, the company can apply for refund of the tariff paid from October 12, 2021. The tariff pressure of relevant export product companies will be significantly improved by the end of 2022, which is similar to the exemption period in 2020.
Among the household electrical appliances exempted this time, there are many products with rapidly increasing market penetration in China, such as floor sweeping Siasun Robot&Automation Co.Ltd(300024) , air fryer, vertical refrigerated display cabinet, etc. Most of these emerging track enterprises are in a critical period of exploring overseas markets. Obtaining tariff exemption again will effectively reduce cost side resistance and speed up the process of overseas market development.
In addition to the products exempted again this time, there are still a large number of household electrical appliances in China that have never received tariff relief, and the additional tax rate is in the range of 7.5% ~ 25%. We believe that it has become normal for China’s major household electrical appliances to impose tariffs on exports to the United States. Most household electrical appliance export companies have responded by adjusting the structure of export products, improving production efficiency and transferring production bases, which reflects the pressure resistance of China’s household electrical appliance export enterprises in terms of production and supply chain adjustment. In the medium and long term, we believe that China’s household appliance manufacturing industry still has obvious advantages in supply chain, manufacturing production and brand in the world, and should give high-quality export enterprises and brand overseas enterprises a higher value cognition.
Investment suggestion: recommend leading household appliances Midea Group Co.Ltd(000333) , Haier Smart Home Co.Ltd(600690) , which have the advantage of global industrial chain layout; Pay attention to the sweeping Siasun Robot&Automation Co.Ltd(300024) leaders Beijing Roborock Technology Co.Ltd(688169) , Ecovacs Robotics Co.Ltd(603486) , cleaning appliance OEM enterprises Kingclean Electric Co.Ltd(603355) , Fujia shares that continue to explore the overseas market of independent brands; Pay attention to Joyoung Co.Ltd(002242) and its parent company JS global life, which manufactures air fryers for ninja; Pay attention to Chinese kitchen small electricity export enterprises Guangdong Xinbao Electrical Appliances Holdings Co.Ltd(002705) , Bear Electric Appliance Co.Ltd(002959) ; Pay attention to the commercial refrigerator faucet Qingdao Hiron Commercial Cold Chain Co.Ltd(603187) .
Risk factors: macroeconomic environment fluctuations, rising raw material prices, repeated outbreaks at home and abroad, exchange rate fluctuations, serious decline in market end demand, decline in export prosperity and other risks.
