Since March, letters of price increase of various household appliances have come one after another. After Haier and Midea, Gree and oaks also announced that they would raise prices from April.
According to a document from Guangxi Shengshi Xinxing Gree Trading Co., Ltd., due to the continuous rise of raw material prices and the increase of various operating costs, the company decided to adjust the price of household air conditioning products from April 1, 2022. The reporter contacted Guangxi shengshixinxing on March 28, and relevant people of the other party said that there was a plan to increase the price.
In the view of the industry, the rapid increase in the price of raw materials since last year has significantly pushed up the cost of household appliances, and the increase in the price of household appliances has exceeded 20% since it was 10% – 15% in the middle of last year. This pressure is also reflected in the financial reports of several household appliance enterprises. So, how long will the price rise continue, and how can enterprises alleviate the pressure transmitted from the upstream supply chain?
Gree and other multi brand price adjusted household appliances generally rose
According to a person from a supply chain who told the Securities Daily, Gree Headquarters allows local dealers to adjust prices according to the actual situation. It is understood that at present, in addition to Guangxi, Gree northeast and other regions, product prices have also ushered in a round of rise. According to the notice of Guangxi shengshixinxing, the price adjustment range of air conditioner is 100300 yuan / set for hanging up and 100500 yuan / set for cabinet machine.
Ningbo oaks also issued a price increase notice to dealers, saying that due to the continuous rise in the price of major raw materials, it decided to increase the price of air conditioning by 3% – 5% on April 1.
Not only Gree and oaks, since this year, many home appliance enterprises have raised their shipping prices to suppliers, and even some brands have experienced multiple rounds of increases. Haier and Midea have raised the prices of air-conditioning products since March 16. In addition, Midea’s refrigerators and washing machines have increased by 5% and small household appliances have reached 20%. A Midea dealer said: “Midea’s air conditioner has risen three times this year, with a small increase each time, but it also adds up to 15%.”
It is understood that the price increase of air ice washing electricity is close, about less than 15%. Due to the relatively low price base and relatively strong demand, small household appliances increased by more than 20%.
At present, this round of price rise mainly occurs in the field of white TV sets and small household appliances. With the decline of upstream panel prices, the color TV market after a wave of rise last year is relatively calm at present. However, some people in the supply chain said, “if the large number of raw materials continue to rise, it does not rule out the possibility that the price of high-end color TV sets will rise in the second half of the year.”
Chen Rui, the general manager of Aowei daily, said that with the arrival of the weak price rise of the TV panel in the second half of last year, the general manager of Aowei Daily’s plan to adjust the price rise rate of the panel is expected to stop falling in the second half of last year
how to tide over the cycle of rapid cost rise
“The current rise in the price of household appliances is mainly due to the high price of raw materials such as copper and steel, and the tense expectation on the supply side is exacerbated by the international market situation.” Major general Ding, founder of nail technology, believes that.
The transmission effect of the rise of raw materials in the household appliance industry is more obvious Sinolink Securities Co.Ltd(600109) data show that in the first quarter of this year, aluminum, copper, plastics and steel in the cost of household appliances rose by 54%, 17%, 8% and 5% year-on-year respectively. These four raw materials generally account for more than 50% of household appliances such as air conditioners, refrigerators and washing machines. Among them, aluminum and copper rose by more than 116% and 86% compared with the second quarter of 2020, which has just begun the upward cycle of prices. Under the pressure of raw material price, most home appliance brands are helpless to raise the price of terminal products.
According to he Jinming, general manager of Aowei cloud network’s home appliance business department, after October last year, the price of bulk materials showed signs of stabilizing and falling. Affected by geopolitics, the bulk price represented by crude oil rose sharply again, which brought great pressure to Chinese enterprises, so they had to adjust the price system again.
Since the second half of last year, the performance of household appliance enterprises has also shown great pressure. According to the third quarter financial report data, Gree Electric Appliances Inc.Of Zhuhai(000651) revenue and net profit decreased by more than 15%, while Midea Group Co.Ltd(000333) and Haier Smart Home Co.Ltd(600690) revenue and net profit increased by a small margin; Omar electric appliance expects a net profit loss of 62 million yuan to 93 million yuan in 2021, while Whirlpool (China) Co.Ltd(600983) expects a net profit loss of 530 million yuan to 630 million yuan last year.
Under the continuous rise of manufacturing costs, the export orders of Chinese household appliance manufacturing enterprises and the increase of product prices in China’s retail market lag behind, which continues to weaken the profitability of enterprises. At the same time, the continuous price rise of products under the cost guidance, to a certain extent, the demand of the consumer side, which makes the transfer of cost pressure of household appliance enterprises lag behind, resulting in a temporary decline in gross profit margin.
“The price rise trend of household appliances may continue in the first half of this year, but the increase will gradually weaken.” Major general Ding believes that “although the cost of raw materials continues to operate at a high level, home appliance enterprises are trying to alleviate the cost pressure by promoting the structural upgrading of products and the evolution of the industry as a whole to the high-end trend.” He suggested that next, household electrical appliance enterprises should further do a good job in risk expectation and control of the supply chain, concentrate resources on advantageous categories, and steadily do a good job in high-end structural upgrading.
“Household electrical appliance enterprises should strengthen the cost reduction and efficiency improvement of the whole value chain, lock the price and foreign exchange of bulk products and RMB exchange rate, appropriately hedge, avoid ups and downs of operation, and aim at stable operation and high-quality development.” He Jinming said.
