China Household Appliances Association
In 2021, the impact of the COVID-19 epidemic continued. The appliance industry faced many challenges, such as the insipid domestic market demand, soaring raw material prices, soaring international logistics costs, blocked supply chains, and appreciation of the renminbi. Nevertheless, China’s home appliance industry overcame difficulties and forged ahead, showing strong development resilience. The annual main business income achieved rapid growth, especially the export volume exceeded the $100 billion mark. China’s home appliance industry adheres to the road of high-quality development and moves firmly towards the goal of becoming a “leader in global home appliance scientific and technological innovation”.
Steady growth in adversity, driven by new categories
The operation of China’s household appliance industry in 2021 has several characteristics:
1.The income of the industry has achieved rapid growth. The main business income of the household appliance industry in 2021 was 1.73 trillion yuan, a year-on-year increase of 15.5%, mainly driven by the low base in the same period of 2020 and exports.
2.The profit growth rate was significantly lower than the revenue, with a profit of 121.8 billion yuan, a year-on-year increase of 4.5%. Multiple factors such as bulk raw materials, shipping and exchange rate had an adverse impact on the enterprise’s profits.
3.The domestic market is relatively flat, and the market growth of traditional products is weak, but there are many highlights, which are reflected in the continuous upgrading of product structure and the popularity of high-quality traditional household appliances in the market; In addition, clothes dryers, integrated stoves, dishwashers, floor washers, floor sweeping robots and other emerging categories are rising rapidly.
4.Exports are booming. The advantages of the whole industry chain of China’s home appliance industry, coupled with the surge in home office demand worldwide and the substitution effect of Chinese production, have kept the export orders of home appliance enterprises relatively full. Customs data show that in 2021, China’s home appliance industry broke through the $100 billion mark for the first time, reaching $104.4 billion, a year-on-year increase of 24.7%.
Bear triple pressure in advance
The global epidemic is still spreading, and excellent achievements have been made in domestic epidemic prevention and control, but the repeated small-scale and frequent outbreaks still affect the rhythm of domestic economic recovery. The triple pressures of shrinking demand, supply shock and weakening expectation pointed out at the central economic work conference in 2021 exist in the household appliance industry.
Demand contraction pressure: the domestic market demand is weak, and there is only a restorative growth in the first quarter of 2021. Since the second half of the year, the growth rate has slowed significantly, and the consumption of household appliances is obviously under pressure. According to Aowei data, the retail scale of home appliance market in 2021 was 760.3 billion yuan, a year-on-year increase of 3.6%, but a decrease of 7.4% compared with 2019. At present, the domestic epidemic has been repeated from time to time, and the prevention and control has entered the normalization, affecting consumer behavior and confidence.
Supply shock pressure: the epidemic has led to the obstruction of the global supply chain, the high prices of raw materials and shipping, the tight use of industrial electricity, and the impact of RMB appreciation. The growth of income and profits of most household electrical appliance enterprises has decreased, profits have been further compressed, and the rising trend of raw material prices has slowed down recently.
Expected weakening pressure: since the third quarter of 2021, domestic economic growth, especially consumption growth, has shown signs of slowing down. At the same time, with the slow recovery of the global economy, the reduction of transfer orders, the growth rate of household appliance export fell month by month, and the operation of household appliances showed a trend of high before and low after. In 2022, after two years of high growth, international demand is uncertain.
At the beginning of 2022, the impact of the epidemic is still on. The epidemic for two consecutive years has had a great impact on many industries. The operation of many enterprises, especially small and medium-sized enterprises, is difficult, the income of residents is affected, the consumption power is weakened, the consumption confidence is insufficient, and the pressure of consumption demand in the domestic market is still large. Although the World Health Organization and some epidemic prevention experts recently expressed a certain degree of optimism about ending the epidemic in 2022, there is still uncertainty about whether the epidemic can end as soon as possible, and the industry must be prepared to deal with various difficulties.
For the work deployment in 2022, the central economic work conference proposed to focus on stabilizing the macro-economic market, continue to do a good job in the work of “six stabilities” and “six guarantees”, continue to implement new tax cuts and fee reductions for market subjects, deepen the reform in key areas, stimulate market vitality and endogenous driving force for development, and use market-oriented mechanisms to stimulate enterprise innovation investment. In order to implement the spirit of the meeting, the national development and Reform Commission recently issued the notice on doing a good job in promoting consumption in the near future, supporting enterprises such as household appliances and furniture to carry out activities of “replacing the old with the new” and “replacing the old with the abandoned”, strengthening the publicity and interpretation of the standard of safe service life of household appliances, and encouraging the rational renewal of household appliances. The Ministry of industry and information technology issued the guidance on accelerating the construction of modern light industry system (Draft for comments), promoting the core technology breakthrough, product innovation and upgrading, digital transformation and promoting the consumption of green household appliances in the household appliance industry. We believe that with the implementation of the “seeking progress while maintaining stability” policies of the central economic work conference, the triple pressure is expected to be relieved in 2022.
For the industrial development in 2022, we think we should pay attention to the following three points. First, from the rapid growth of products such as floor washing machines in 2021, it is not difficult to find that even under the condition of great downward pressure, the market demand driven by new categories and new technologies is still strong. Enterprises should continue to strengthen technological innovation, study consumer demand and consumption pain points, and constantly inject new vitality into industrial development. Second, in 2021, exports exceeded the $100 billion mark and stood at an all-time high for two consecutive years. It is expected that it will be difficult to continue to operate at a high level in 2022, and the downward pressure will surge. Enterprises should be more cautious in their layout. Third, pay attention to the new development pattern of mutual promotion of domestic and international double cycles. The continued prosperity of the domestic consumer market in recent years has led some enterprises that used to focus on export to turn to the domestic market. However, it should be noted that China’s home appliance industry has formed a huge volume radiating the global market so far. Focusing only on a single market can not meet the sustainable development of the industry. At this time, we should pay special attention to the development idea of domestic and international double circulation.
Hope for a bright future through innovation
We should not only face up to difficulties and challenges, but also strengthen our confidence. In the long run, China’s economy is resilient, and the fundamentals of long-term improvement will not change. During the “14th five year plan” period, a new round of scientific and technological revolution and industrial reform have developed in depth. New technologies will promote profound changes in the traditional manufacturing industry, accelerate the pace of enterprise innovation, present the characteristics of stratification and personalization in the consumer market, and there are new development opportunities for the development of the home appliance industry.
1.First, scientific and technological innovation will enhance the competitiveness of China’s home appliance industry. Scientific and technological innovation is the only way for China’s home appliance industry to achieve high-quality development. China’s home appliance industry is striving to strengthen basic research and original innovation, and build an innovation system based on the global market and user needs; Strive to improve the collaborative innovation capability of the industrial chain, make breakthroughs in core technologies and key technologies, and overcome short board and “neck” technologies.
2.Second, consumption tends to be fashionable, intelligent, comfortable and healthy, and emerging categories will continue to rise. In the medium and long term, the further improvement of China’s urbanization rate, the accelerated promotion of the common prosperity policy and the popularization of social welfare such as pension and medical insurance will provide support for China’s consumption growth. Under the general trend of consumption upgrading, high-quality, personalized, fashionable, comfortable, intelligent, healthy and other emerging categories and scene solutions that accurately match the needs of subdivided people through scientific and technological innovation and consumer research will grow rapidly and become the main driving force driving the consumer market.
3.Third, the global expansion of China’s home appliance industry is facing new development opportunities. The epidemic and the complex and changeable Global trade environment have brought many uncertainties to economic development and have an impact on the current global industrial chain and supply chain. However, with the further improvement of the technological innovation ability of China’s home appliance industry, the complete industrial chain supply chain system, the leading advantages of intelligent and digital transformation, and the consumption insight ability relying on new technologies will help to enhance the influence of China’s own home appliance brands in the global market.
4.Fourth, the home appliance industry chain will be comprehensively transformed to green and low-carbon. China has incorporated carbon peak and carbon neutralization into the overall layout of ecological civilization construction. While meeting consumer demand, the household appliance industry must comprehensively transform to green and low-carbon in terms of industrial structure, product structure and service mode. On the one hand, through technological and management innovation, improve the green manufacturing system and realize energy conservation, emission reduction and carbon reduction in the whole process; On the other hand, through continuous innovation, expand the effective supply of green and low-carbon products, advocate the concept of green and low-carbon consumption, and help the green and low-carbon lifestyle.
5.Fifth, the home appliance industry will accelerate the digital transformation and further improve the level of intelligent manufacturing. Deep integration with 5g, artificial intelligence, big data, edge computing and other new technologies to achieve comprehensive improvement in management, efficiency and quality is the development direction of the home appliance industry and one of the objectives of the “14th five year plan” of the industry. At present, the upgrading and transformation of intelligent manufacturing of home appliance enterprises is advancing rapidly.
In the guiding opinions on the development of China’s household appliance industry during the 14th Five Year Plan period, China Household Appliance Association proposed that the overall development goal of China’s household appliance industry during the 14th Five Year Plan period is to continuously improve the global competitiveness, innovation and influence of the industry, and become a leader in global household appliance science and technology innovation by 2025. Despite all kinds of unexpected difficulties and challenges, we firmly believe that as long as we have firm confidence and adhere to innovation driven, transformation and upgrading, we will achieve our goals.
China Household Appliances Association
Post time: Feb-17-2022