The high-end market is the key to breaking the situation.
In March, the home appliance industry opened the "price rise mode" again.
On March 31, Shanghai clivo Midea HVAC Equipment Co., Ltd. issued a notice announcing that the prices of Midea building technology products will rise from April 1. Not long ago, a document from Midea's Zhengzhou Regional Operation Center showed that the prices of various categories have been raised successively since March 16, with price adjustments ranging from 5% to 20%.
Gree and oaks also announced price increases. According to the price increase letter of Guangxi Shengshi Xinxing Gree trading company, the company decided to adjust the price of household air conditioning products from April 1. The hanging up price in Guangxi ranged from 100 yuan to 300 yuan / set, and the cabinet price ranged from 100 yuan to 500 yuan / set. According to the price increase letter of Ningbo oaks home appliance sales Co., Ltd., the company decided to increase the price of air conditioning products by 3% - 5% from April 1. In addition, Haier, TCL, Toshiba, Daikin and other enterprises have also announced price increases, with varying increases.
For the price increase, household appliance enterprises have always been very cautious. As of the press time of our reporter, the above companies involved in price adjustment have not responded positively. In fact, as early as at the general meeting of shareholders in February this year, Dong Mingzhu, chairman and President of Gree Electric Appliances Inc.Of Zhuhai(000651) company, mentioned the pressure brought by raw materials when replying to shareholders' questions on the spot, "some prices have increased by 50%, and even some materials have increased by 100%." She said.
various material costs soar
In fact, from the end of 2020, home appliance enterprises have started a wave of price rise. In late December 2020, Meizhi, Lingda and Haili, the three major compressor enterprises in China's air conditioning industry, successively issued price increase notices, announcing the implementation of a new price system from January 1, 2021. Subsequently, air conditioning enterprises including Gree, Midea, Haier, oaks and Hisense also raised prices one after another, ranging from 10% to 15%.
Since this year, the offline home appliance market has opened the "price rise tide" again. According to AVC monitoring, as of March 27, the average price of air conditioner increased by 388 yuan year-on-year to 4025 yuan / set, the average price of refrigerator increased by 810 yuan year-on-year to 5981 yuan / set, and the average price of washing machine increased by 415 yuan year-on-year to 3961 yuan / set.
"The manufacturing cost of China's household appliances continues to rise, while the improvement of export orders and product prices in China's retail market lags behind, which continues to put pressure on the profitability of Chinese enterprises. On the other hand, the continuous price rise of products under the cost orientation also suppresses the demand of consumers in China's market, resulting in insufficient effective demand for household appliances." He Jinming, vice president of ovicloud, told the 21st Century Business Herald.
In recent years, affected by the epidemic, the market sales of large household appliances have been cold. On the one hand, the expansion of retail enterprises' market activities is affected, and the demand is difficult to be released. On the other hand, the most important annual China home appliance and consumer electronics Expo (AWE) in the home appliance industry was also postponed due to the epidemic, which disrupted the rhythm of product release and new product listing of Chinese home appliance enterprises.
According to AVC data, the overall retail sales of China's home appliance market reached 760.3 billion yuan in 2021, an increase of 3.6% year-on-year in 2020. However, it still fell by 7.4 percentage points compared with 2019. In March, the market of traditional household appliances was further weak due to the repeated impact of the epidemic situation all over the country in the off-season.
According to the data, from March 7 to 13, the sales volume of refrigerators in the offline market was 719 million yuan, a year-on-year decrease of 25.6%; The sales volume of washing machines was 505 million yuan, a year-on-year decrease of 29.9%, and the sales volume of air conditioners was 993 million yuan, a year-on-year decrease of 29.3%; The sales volume of freezers was 32 million yuan, a year-on-year decrease of 9.9%.
At the same time, affected by the global epidemic and the complex international situation, the prices of raw materials such as copper, aluminum and compressors have continued to rise sharply since the second half of 2020, resulting in the rising production costs of enterprises. According to the latest financial report, the cost of Haier Smart Home Co.Ltd(600690) raw materials reached 124004 billion yuan last year, an increase of 21.7% over 2020 Hisense Home Appliances Group Co.Ltd(000921) last year, the cost of raw materials also increased by 48.9% year-on-year.
AVC pointed out that the upward cycle of raw material prices actually began in the first half of 2020. It is due to the abundant global currency caused by the abundant monetary policies of governments around the world to stabilize the economy under the influence of the epidemic and the cash subsidies issued by the United States, resulting in China's imported inflation. After October last year, due to the expectation of interest rate increase by the Federal Reserve and insufficient consumer demand, the price of bulk materials showed signs of stabilizing and falling, However, after the geopolitical conflict, the commodity prices represented by crude oil rose sharply again.
The S & P Goldman Sachs commodity index (GSCI) rose more than 30% in the first quarter of this year, the largest quarterly increase since 1990. It is reported that dozens of plastic giants have recently announced that they will raise the price of plastic from April 1, with a maximum increase of 6360 yuan / ton.
He Jinming pointed out, "Chinese household electrical appliance enterprises have the characteristics of two ends at home and abroad. The supply and pricing power of bulk products such as copper ore and oil are overseas. As the most important production and manufacturing base of household electrical appliances in the world, the market of Chinese household electrical appliance enterprises, especially export-oriented enterprises, is overseas, and the price of bulk materials is on the market. There are few places for Chinese enterprises. However, due to fierce competition and weak bargaining power for overseas OEM / ODM customers of Chinese enterprises, Chinese household electrical appliance enterprises are currently It is very likely to be squeezed at both ends. "
Some analysts pointed out that from the current situation of global supply, many home appliance manufacturers have faced a serious shortage of metals from aluminum to zinc, and raw materials such as copper and aluminum are important raw materials in home appliance manufacturing. Goldman Sachs Group recently predicted that "considering the current obvious supply shortage environment, copper inventories are expected to decline further, and copper prices will reach a record high of US $12000 per ton in the next 12 months".
how to break the game
Under the pressure of cost, "actively optimize the product structure and develop medium and high-end products" has become the consensus of the household appliance industry. At the end of last year, Midea invested $5 billion to establish an intelligent Kitchen Appliance Industrial Park, hoping to create a high-end kitchen appliance manufacturing business card. Haier accelerated the strategic transformation of the smart home of the Internet of things, focusing on the construction of high-end brands, scene brands and ecological brands.
According to the latest annual report, Haier Smart Home Co.Ltd(600690) achieved a revenue of 227556 billion yuan in 2021, an increase of 8.5% over 2020 and 13.3% over 2019. The company believes that one of the main reasons for the rapid growth of revenue is to give full play to its advantages in high-end brand layout, complete sets of products and scenario schemes, enlarge the single user value and realize the rapid growth of high-end brands.
It is reported that in 2021, the net income of kasati, a high-end brand under Haier Smart Home Co.Ltd(600690) banner, exceeded 10 billion yuan, reaching 12.9 billion yuan, a year-on-year increase of more than 40%. Among them, in terms of offline retail sales, the market share of kasati brand washing machines and refrigerators in the price range of more than 10000 yuan in China reached 73.9% and 36.2%, and the market share of air conditioners with a unit price of more than 15000 yuan reached 30.3%.
The average price of refrigerators, air conditioners and washing machines in the offline market has reached two to three times that of the industry.
Driven by high-end business, Haier Smart Home Co.Ltd(600690) overall gross profit margin was 31.2%, 1.6 percentage points higher than that in 2020. "High end brand strategy also helps to create greater customer value to resolve the adverse impact of raw materials and labor costs." Haier Smart Home Co.Ltd(600690) is specifically mentioned in the annual report.
Hisense Home Appliances Group Co.Ltd(000921) also pointed out in the annual report that in the case of weak scale growth, superimposed with the adverse effects such as the sharp rise in the cost of raw materials, the profit space of enterprises is squeezed, but the trend of high-end and intelligent products remains unchanged. Dai Huizhong, senior vice president of Hisense Group and President of home appliance group, once said that the trend of consumption upgrading has put forward users' demand for smart, healthy and energy-saving home appliance experience, and systematization, intelligence and ecology will become a new track for the home appliance industry to seize the increment.
In fact, the recovery of China's home appliance market last year has something to do with the substantial growth of high-end products. According to the data of China Commercial Industry Research Institute, the retail sales of China's home appliance market in 2021 was 760.3 billion yuan, a year-on-year increase of 3.5%; Among them, the proportion of high-end products in the offline market continues to increase. Among the top four categories such as refrigerators, color televisions, cleaning appliances and washing machines, the proportion of high-end products is 60.7%, 59.7%, 55.9% and 55.5% respectively. Zhu Jiagui, executive president of Hongxing Red Star Macalline Group Corporation Ltd(601828) home furnishing group and general manager of large operation center, once pointed out that "in the current large household appliance market of more than 700 billion, high-end products account for about 30% and have a market of more than 200 billion."
From the spring launch of major manufacturers this year, it is not difficult to find that we all point to high-end and intelligent products. Among them, Hisense refrigerator starts from long-term preservation, nutrition and health, intelligent management and large space storage to capture the medium and high-end market Hangzhou Robam Appliances Co.Ltd(002508) cuts into the integrated stove from the high-end, hoping to reshape the whole market pattern.
"While the integrated stove is growing rapidly, it is also over mythical. The whole market is restless and irrational, lacks the guidance of high-end brands, and the product quality is mixed. In contrast, the high-end needs of many consumers have not been met." Hangzhou Robam Appliances Co.Ltd(002508) integrated product line general manager Zhang Xuan told reporters.
In view of how household electrical appliance enterprises cope with the rise of raw material prices, he Jinming suggested that household electrical appliance enterprises should strengthen the cost reduction and efficiency improvement of the whole value chain, drive the improvement of the product structure of the end market in the Chinese market through product R & D and marketing innovation through digital transformation and lean management in all links of procurement, marketing, research and service, improve the sales structure, improve the operation quality, and do a good job in locking the price and exchange rate of bulk products and RMB exchange rate, In response to rising raw material prices.
It is worth mentioning that Chinese home appliance manufacturers are also upgrading their product structure in overseas markets. The annual report shows that Haier Smart Home Co.Ltd(600690) overseas revenue in 2021 was 113.73 billion yuan, a year-on-year increase of 13%; The operating profit was 5.93 billion yuan, a year-on-year increase of 48.1%, a record high.
According to Liu Bin, vice president of Hisense international marketing company, last year, Hisense's flagship high-end image quality uled TV increased by 215% year-on-year in the United States, and overseas sales increased by 279% year-on-year. Liu Bin said that in 2022, Hisense will continue to make efforts on overseas high-end picture quality flagship uled TV, realizing a year-on-year increase of more than 40% in high-end sales. According to its disclosure, Hisense will deploy nearly 100 flagship stores of high-end brands around the world this year.
According to public data, last year, China exported 3.873 billion household electrical appliances, with an export amount of about US $98.72 billion, an increase of 10.1% and 22.3% respectively year-on-year. According to the "2021 home appliance market trend and 2022 market opportunity insight report" released by GfK, the high-end and green trend will be a "great opportunity" for the globalization of China's home appliance market.
