5G, Internet of Things: key for home appliances industry – Rupert Hoogewerf

 

Rupert Hoogewerf

Midea has become China’s most valuable home appliances firm, and 5G and Internet of Things are becoming a driving force in the development of the industry, says Rupert Hoogewerf, chief researcher of the Hurun Report on the release of its latest report, according to the China Daily.

The China Daily:

The top 10 ranking, released by Hurun for the first time, was based on market capitalization or valuation of China’s private home appliance companies.

These companies all have their self-developed brands. However, the ranking excluded consumer electronics companies such as Xiaomi, as well as TCL, which sold its smart terminal business in 2018.

Rupert Hoogewerf, chairman and chief researcher of Hurun Report, said 5G, Internet of Things and big data have huge development prospects for the home appliance industry.

The effect of online channels on the home appliance industry is growing, Hoogewerf said, adding that in China’s home appliance market, which has a market size of 900 billion yuan, online sales account for nearly 40 percent and the ratio is increasing. Tmall and JD have become leading enterprises, and the industry is no longer dominated by Gome and Suning.

China’s home appliance industry has become mature, with total accumulated value of the top three companies accounting for 80 percent of the total, Hoogewerf said.

Except for Galanz Group, the remaining nine are all listed companies, which is rare to see in China, he added.

The businesses of the top 10 home appliance enterprises covers air conditioners, refrigerators, washing machines, soybean milk makers, kitchen ventilators, microwave ovens, robot vacuum cleaners and more.

Geographically, the top 10 list includes four companies from the Guangdong-Hong Kong-Macao Greater Bay Area, four companies from the Yangtze River Delta and the remaining from Beijing and Qingdao.

More at the China Daily.

Rupert Hoogewerf is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

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Rising labor costs and lower sales growth drive outbound expansion - James Roy

James Roy

Haier´s purchase of GE´s appliances and Midea´s efforts to get a bigger stake at Germany´s robotic company Kuka both reflect the challenges the giant Chinese firms face at home, says business analyst James Roy to Barron´s. Rising labor costs and slowing growth of domestic sales makes both look abroad.

Barron´s:

James Roy, an analyst at consultant China Market Research Group, says the deals represent two very different ways in tackling the challenges both face. For Midea, “labor costs are continuing to rise and the pool of available workers shrinking over time,” Roy tells Barron’s Asia. A number of Chinese provinces have lavished annual increases in minimum wages, while an ageing workforce and preference for services jobs are also draining the talent pool. A quick hunt through Midea’s annual financial reports indicates wages as a percentage of sales costs have risen exponentially over the last few years. 

That’s been eating in to Midea’s bottom line. The company’s traditionally focused on the low-to-middle end of the Chinese market for appliances like refrigerators and washing machines, which typically have lower margins. ... 

The rationale behind Haier’s purchase of GE’s appliances business looks simpler to decode. The company’s battling similar headwinds to Midea, namely sluggish domestic sales due to the Chinese economy’s slowdown. In fiscal 2015 its total revenues slumped by about 5%. A recent fightback in China’s property market hasn’t brought much reprieve either, given the rebound’s been mostly confined to top tier cities like Shanghai and Shenzhen. Haier bills itself as the world’s biggest white goods maker, with global market share of 10%, but the vast majority of this comes from China. Estimates put Haier’s U.S. sales at a tiny 1% of its overall revenue. GE “gives them access to a higher end segment than they’ve previously been able to get to through their own self-branded products,” explains China Market Research’s Roy.... 

Still, there’s more both Midea and Haier could do to clean up their act. China Market Research’s Roy reckons both have been slow to catch up with new trends in home appliances, or have made missteps here in the past. Case in point: Both Haier and Midea have been slow to the punch when it comes to new offerings like air purifiers – products with obvious captive markets given the poor air quality in Chinese cities. Additionally, dryer machines, for example, just haven’t caught on given locals’ propensity for hanging clothes out of windows to dry. Roy thinks by bringing more international expertise into the fold, the pair is more likely to avoid being taken to the cleaners in future. “There’s a growing comfort among large Chinese companies to acquire other companies and learn from their best practice,” he believes. “There’s a realization that they need to learn more international know-how.”

More at Barron´s

James Roy is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more experts on China´s outbound investments? Do check out this list.  

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• Buy Robot: Silicon Valley Misses Out as China Nabs Kuka
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• Innovation experts at the China Speakers Bureau (updated)
• Midea Makes $5 Billion Bid For German Robotics Company

The global road of China´s white goods producers - James Roy

James Roy

Washing machines might not be as sexy as real estate and IT-investments, but China´s white good producers have also embarked on a global road, says business analyst James Roy to Reuters. Haier has been investing abroad for decades, but others are following.

Reuters:

Haier is not alone. Major Chinese white goods makers such as Hisense Electric Co Ltd (600060.SS) and Midea Group Co Ltd (000333.SZ), have been on an overseas spending spree this year, as they seek to snap up foreign brands to tap faster-growing markets as growth slows at home. 

"Access to other markets helps them find new sources of growth as the domestic market slows," said James Roy, associate principal of Shanghai-based China Market Research Group. "It's also an opportunity to gain additional know-how to succeed in China, where competition is becoming fairly intense." 

For rivals such as Whirlpool Corp (WHR.N), Electrolux, LG and Samsung Electronics (005930.KS) - some of the biggest names it will come up against in the United States - one aspect of Haier's rise in Australia will give some cause for comfort. Despite integration of their sales, logistics and customer care operations, the deal has yet to lead to larger market share gains for Haier’s own brand, highlighting challenges the group faces as it seeks to build market share in the mid-tier segment of the market.

More at Reuters.

James Roy is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you looking for more experts on China´s outbound investments? Do check out this list.