Appliance companies abandon the traditional strategy to accelerate the emerging overseas markets

Although more than half of the summer air conditioning sales season, household appliances companies represented by Gree, Midea and Haier still have to expand production capacity. Rising raw material prices lowered gross margins, and profit margins have been declining. Exports of home appliance companies have been growing faster than domestic sales. Insiders pointed out: "In the second half of the home appliance companies will compete in overseas markets."

Wang Yuechun, Minister of Overseas Strategic Development of Changhong Electric, said in an interview with the “Securities Daily” reporter: “This year's overseas strategy has been accelerating and we will focus on emerging markets such as Southeast Asia, Australia, and South America represented by Indonesia. We will also implement strategic transformation and gradually abandon the original strategy. OEM, do your own brand."

During the interview with the reporter, not only Changhong, but also many leading home appliance companies have revealed that overseas roads are focused on emerging markets and necessary adjustments and transformations are made.

Yu Haitao, director of public relations at Hisense News, told reporters: "Enter the Central African region one by one."

“The next step is to continue to expand the market in Southeast Asia.” The relevant person in charge of Gree’s marketing department told reporters.

Changhong gradually abandoned OEM

Hisense discards volume sales In recent years, China's home appliance companies have accelerated the pace of overseas investment and mergers and acquisitions.

“Southeast Asia, Africa, and Asia South America are key areas for Changhong. Changhong is an integrated product line. Overseas development has been rapid in recent years.” Wang Yuechun told reporters.

He said: "Changhong has been doing OEM is currently taking the brand road gradually, the next step in the transformation of overseas markets, and gradually give up OEM, and gradually make the Changhong brand up the market."

Today, most home appliance companies look to emerging markets such as North Africa and Central and South America to increase their efforts in development.

Hisense Yu Haitao told reporters: “Hisense bases itself on developed countries in Europe and America and gradually gives up on short-term quantitative sales benefits to increase brand premium and brand awareness in the international market.”

“Abandoning the concept of winning prices, the emerging markets are driving forces to ease the downward pressure on profits.” Zhi Gao’s management believes.

A home appliance broker told reporters: "At present, most of the company's own-brand business is positioned at a medium price, and the channels are directly facing the retail market. Some OEMs of large chains and middlemen are low-end and mid-to-high end products. single."

The profit margin in the domestic market has narrowed again Since the competitive overseas market began in May, commodity prices have fallen significantly. The peak season has come. Gree's sales in the air-conditioner market are even higher than expected, and production pressure is high.

On the one hand, China's household electrical appliance companies have to expand their production capacity as their own responsibility. On the other hand, they must withstand the pressure of anti-dumping.

At present, the total air-conditioning capacity of major brands has exceeded 100 million units in 2011. At the same time, with the cancellation of the energy-saving subsidy policy in the first half of this year, the rate of rapid adoption of frequency conversion has greatly increased, and production capacity has expanded rapidly.

According to Wang Yongfeng, an analyst at Rixin Securities, Gree exports 30% of its own brand and 70% of OEM orders. After the Chinese New Year, the company's OEM orders and contract prices have been raised. This part of the orders for net profit growth will be reflected in the second half.

Many home appliance companies have begun to compete in the emerging markets and seize the overseas market in the second half of the year to increase profit margins.

The relevant person in charge of Gree’s marketing department stated: “Gree has developed Brazil, Pakistan, Vietnam and other places, and will continue to expand the Southeast Asian market.”

Haier always enjoys expanding overseas markets, and has built more than 30 production bases worldwide.

Hisense began to deploy Africa through its Egyptian base. Yu Haitao, head of public relations at Hisense News, told reporters: “Using Europe as a pilot and entering the Central African region one by one.”

Meiling also aims at the Pakistan market. On May 28, Zhongshan Changhong, a subsidiary of Meiling Electric (9.21, -0.03, -0.32%), wished to contribute a total of US$3.4 million to set up two joint ventures in Pakistan, responsible for manufacturing and selling air-conditioning products locally.

Meiling brand manager told reporters: "Millan started its overseas strategy very early and will continue to step up in the future, but the location has not yet been clearly selected."

Historically, home appliance companies in China have been struggling to go overseas. However, home appliance companies are making efforts overseas and stepping up is still an irreversible trend.

While China’s home appliance listed companies are singing all the way to accelerating their entry into emerging markets, we have to see that Chinese household electrical appliances have continuously encountered anti-dumping lawsuits in the international market. Not only traditional European and American forces are still present, but in recent months, emerging markets in Southeast Asia have trade barriers. Measures also began to take the lead.

The rapid penetration of barriers overseas has lingered recently. The United States made anti-dumping actions against Chinese sweeteners, the US Commerce Department issued a final ruling on the oil well management case, and the EU launched an anti-dumping investigation against Chinese glass fiber (29.78, 0.09, 0.30%)...

Seven years ago, two large-scale anti-dumping lawsuits filed by the European Union and the United States against Chinese household appliances caused domestic home appliance companies to slow down the pace of internationalization and used Turkey and Mexico as a springboard for re-entering the EU and North American markets.

Now that China’s Home Appliance Daxing has announced the opening of markets in Africa and Southeast Asia, its “blocking hand” has once again come out.

The road to internationalization of home appliance companies has hit the threshold for a short time. How can we cross this barrier?

Liu Buchen, a senior observer of the home appliance industry, believes that “China has become a global household appliance manufacturing country and it is China’s contribution to the world rather than a threat. Of course, different countries may feel different. For example, for Japanese and Korean home appliance companies, they are more inclined to think of China. The rise of the home appliance industry threatens their interests."

In the era of global integration, numerous world-class companies have invested in factories in China. However, individual countries and regions have also used this opportunity to implement real estate marketing strategies to avoid various tariff and non-tariff barriers.

Luo Qingqi Luo Qingqi, a senior director of Pare Consultancy Co., Ltd., said: "If we want to take it, we must give it first. Our country has its own economic strategy and the coordination of international trade relations is an exchange of interests."

Factual explanation. China's household electrical appliance industry will eventually achieve a strategic transformation from "cheap market" to "brand-driven market". However, this transformation is not easy to achieve.

“Actually, in recent years, the number of anti-dumping cases encountered by Chinese household electrical appliance companies in the international market has decreased rather than increased. This is mainly because Chinese companies are gradually abandoning their low-cost selling strategies when developing international markets,” Liu Buyingchen said.