By home appliance (or household appliance), we mean the hardware that can provide value in the household, ranging from traditional white goods (like “four major appliances” of televisions, refrigerators, washing machines, and air conditioners) to cleaning equipment and home IoT ecosystems. From January to May 2023, China exported over 1.42 billion household appliances, generating about $36.2 billion USD in revenue, as per the latest info from the General Administration of Customs.
Electric fans, vacuum cleaners, and televisions emerged as the most exported home appliances. Notably, despite the challenges posed by the pandemic, the export of washing machines saw a remarkable 37% surge, underscoring the global reliance on Chinese-made products.
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The Chinese home appliance and smart home industry pioneered global expansion since the 1990s, led by key players such as Haier, TCL, and Gree. Evolving from mere manufacturers to “smart manufacturers” and transitioning from merely exporting products to exporting brands, these industry giants now hold nearly 60% of the global market share in domestic appliance production, with a trade volume exceeding 30% worldwide.
Branding Chinese home appliance products in the oversea market
Despite facing challenges such as global economic downturn and supply chain concerns, Chinese companies are actively exploring overseas opportunities. Facing the rise of manufacturing in lower-cost countries like Vietnam and the Philippines, the companies are strategically establishing factories abroad, and hiring local workers to reduce costs and improve competitiveness. To succeed, they are focusing on developing innovative and quality products, building brand recognition, and adapting to evolving market dynamics. It is vital for Chinese companies to maintain brand premium, invest in innovation, and stay ahead in terms of quality, reliability, and smart technology.
In the global competition, Chinese home appliance brands are gradually replacing Japanese and Korean brands. Companies like Haier, Midea, and Gree are gaining dominance, showcasing the success of Chinese brands in the international arena.
Xiaomi has successfully expanded its presence in the global market, achieving substantial overseas revenue of 22.8 billion USD in 2021. The company strategically utilizes digital marketing channels, with a strong focus on e-commerce platforms and after-sales service automation for enhanced operational efficiency. Subsidiary VeSync’s digitalization strategy involves diversifying online channels, integrating them to optimize private domain traffic, and specializing operations based on each channel’s unique characteristics. This approach aims to foster brand loyalty through increased user interactions and a sense of belonging, particularly in international markets.
Key Insight by Continents
China boosts home appliance sales to Middle East and Africa
Despite a slight overall dip in home appliance exports, China experienced an 11.2% year-on-year increase in its exports to the Middle Eastern market during the first ten months of this year.
Hisense, a Qatar World Cup sponsor, succeeded in South Africa after 20 years of development. They tailor products, like a mirror fridge in Africa, based on consumer habits, such as women liking to see themselves while cooking. Haier, another major brand, boosted sales in Nigeria with a generator inverter air conditioner designed for local conditions.
Li Dapeng from Haier notes that Chinese smart household devices are popular for high-end features, challenging the perception of low-quality, low-cost products. This shift has increased market share in the Middle East and Africa. To expand further, companies like Midea, Hisense, and Haier are building factories in Egypt, Algeria, and Jordan, investing more in localized manufacturing to strengthen their positions in these growing markets.
Stable return of sales to ASEAN countries
In October 2022, China’s home appliance exports to Asian countries and regions reached $3.08 billion, marking a 3.7% increase compared to the same month in the previous year. This growth is attributed to favorable policies resulting from the implementation of the Regional Comprehensive Economic Partnership (RCEP). Notably, China’s home appliance exports to ASEAN countries, such as Singapore and the Philippines, saw substantial year-on-year increases of 114.9% and 57%, respectively.
Despite a 2.3% year-on-year decrease in China’s overall home appliance exports to $95.49 billion from January to October, the Asian countries and regions remain China’s primary home appliance export markets.
Notably, minimalism has influenced the design of furnishings, housewares, and home decoration items, giving interior designers unlimited imagination to create personalized spaces and helping to lead the eco‑friendly design movement and application of green concepts. In addition, there is increasing awareness of water and air quality problems. The rise in demand for water filters and air purifiers in ASEAN were demonstrated by the huge variety of such products showcased in major trade shows in the ASEAN region over the past couple of years.
Many famous international housewares brands, like Lenox, Libbey, and others, are competing in the ASEAN market. However, there are also many lesser-known brands and store-brand products. Interestingly, when people buy housewares, factors like the design of the products, their quality, and where and how they are sold are just as important, if not more so, than the brand itself.
Observing shifts in shopping patterns within European countries
Recent research spanning 15 European countries reveals that 93% of shoppers have altered their habits to save money due to increases in inflation and the cost of living. Notably, around one-third are economizing by reducing their use of home appliances (31.1%) or adopting energy-saving practices like washing at lower temperatures (36.2%).
Italy and Denmark stand out as leading countries in embracing these cost-saving behaviors. Italy leads all 15 European nations, with over half of the population opting for energy-saving programs (52.0%) and reduced appliance usage (50.7%) to save money. Denmark also ranks in the top three for both activities, with 41.7% using energy-saving programs and 35.4% reducing appliance usage.
Conversely, Sweden, where electricity costs are comparatively lower, shows a lesser adoption of these practices. Only a fifth (22.2%) are turning to energy-saving programs, and a quarter (24.4%) are reducing appliance usage to save money.
Opportunities identified in Latin America
The Latin America Home Appliances Market is expected to grow at a rate of over 2.5% between 2023 and 2028. Key players in this market include LG Electronics, Panasonic Corporation, AB Electrolux, Samsung, and AEG.
The refrigerator market in Brazil is growing thanks to lower inflation and credit rates, providing easy access for consumers. The trend towards smaller households and increased rentals in urban areas is shaping customer preferences. Innovations like French Door Family Hub black freezers are meeting demand, with companies focusing on energy efficiency and smart features for remote control.
Remarkably, e-commerce is swiftly becoming the primary distribution channel for home appliances in Latin America, particularly in Mexico. The rise is fueled by competitive prices and convenient online payment options. With most homes connected to the internet, digital platforms play a crucial role in product promotion. Companies are responding to environmentally conscious consumers by introducing eco-friendly appliances that conserve energy, water, and gas.
Smart housewares and coffee machines on the rise in the US market
It’s fascinating to note that the types of household appliances people prefer vary by region. In places like the U.S. and Canada, coffee machines are more popular than freezers and dishwashers, with about 69% of households having them, according to a 2022 Statista survey. However, in Eastern countries like China and India, coffee machines are not as popular, with only around 20% usage, while freezers are more commonly used.
In more advanced countries, the use of smart technology like connected refrigerators and washing machines is predicted to drive growth in the near future. On the other hand, developing nations are expected to see growth due to increasing incomes, greater awareness of household appliances, and more people using these products. The trend of working from both home and office is also anticipated to boost the market in the short to medium term.
Key features to bear in mind for Chinese home appliance brands when entering overseas market
In conclusion, successfully introducing Chinese home appliances globally hinges on prioritizing consumer preferences, technology and market adaptation.
- Prioritizing consumer preferences involves emphasizing first impressions, durability, and user-friendly interfaces to cater to diverse lifestyles.
- Ongoing innovation, led by nations like China and the United States, remains vital in adapting to evolving consumer needs.
- Environmental awareness and regional trends, like sustainability preferences in countries such as Germany and Japan, should also be considered.
- Addressing the increasing demand for convenient, smart, and low-maintenance appliances is crucial.
- Affordability and ease of use continue to influence market dominance, notably seen in the enduring preference for traditional washing machines in developing countries like India and China.
