Overview of 1. home appliance industry

The home appliance industry refers to the production and sales of various electrical products with the family as the main place of use, including white goods (such as refrigerators, washing machines, air conditioners, etc.), black household appliances (such as color TVs, stereos, etc.), kitchen and bathroom appliances (such as range hoods, gas stoves, etc.), small household appliances (such as vacuum cleaners, microwave ovens, etc.), etc. The home appliance industry is an important part of China's manufacturing industry and an important area of household consumption.

According to data from the Champ Consulting Group,2022The scale of China's home appliance market reached1.8Trillion yuan, year-on-year growth5.6%, accounting for the global appliance market35%. Among them, the size of the white goods market is7220Billion yuan, year-on-year growth4.2%; black appliance market size is3860Billion yuan, year-on-year growth6.8%; kitchen and bathroom appliances market size is2810Billion yuan, year-on-year growth7.1%; small household appliances market size is3110Billion yuan, year-on-year growth6.4%。

The competition pattern of China's home appliance industry is relatively concentrated, mainly composed of large-scale comprehensive enterprises such as Midea Group, Haier Zhijia, Gree Electric, Sichuan Changhong, Hisense Home Appliances, and specialized enterprises such as Supor, Jiuyang, and Feike Electric. According2022In the first half of the year, Midea's revenue was2019Billions of yuan, net profit240Billion yuan, accounting for the market share of white goods.25%; Haier Zhijia's revenue was1407Billions of yuan, net profit95Billion yuan, accounting for the market share of white goods.19%; Gree Electric's revenue was1248Billions of yuan, net profit195Billion yuan, accounting for the market share of white goods.17%。

China's home appliance product structure presents diversified and differentiated characteristics to meet the needs and preferences of different consumers. From the price level, China's home appliance products cover three grades: low-end, mid-end and high-end. The proportion of high-end products has increased year by year, reflecting consumers' pursuit of quality and function. From a functional perspective, China's home appliances continue to innovate and optimize, introducing elements such as intelligence, energy saving, and health to improve user experience and satisfaction. From a category perspective, Chinese home appliances cover all aspects of life. In addition to traditional large-scale basic equipment, there are also various small and convenient equipment, such as air purifiers, sweeping robots, massage chairs, etc., which enrich consumers' choices.

The main characteristics of China's home appliance consumption are as follows:

Affected by the epidemic, the proportion of online channels increased, offline channels gradually recovered.2022In, China's home appliance online channel sales reached7500Billion yuan, accounting41.7%, year-on-year growth10.3%; offline channel sales reached10500Billion yuan, accounting58.3%, year-on-year growth2.8%. As a result of the epidemic, consumers have become more dependent on online shopping, while online channels have attracted consumers through a variety of marketing tools and services. With the optimization of epidemic prevention and control, offline channels have gradually restored traffic and sales, especially for large home appliances that need to be experienced and installed.

Affected by the real estate cycle, the demand for large appliances is under pressure, and the demand for small appliances is stable.2022In, China's commercial housing sales area was14.7100 million square meters, down year-on-year9.6%; the completed area of commercial housing is11.9100 million square meters, down year-on-year5.4%. Affected by this, the demand for large household appliances that are highly related to real estate has been suppressed, especially air conditioners, refrigerators, washing machines, etc. On the contrary, the demand for small appliances with low real estate relevance is relatively stable, especially cleaning appliances and kitchen appliances.

The export market grew strongly due to the rebound in external demand.2022In, China's home appliance exports reached650Billion US dollars, year-on-year growth18.5%. Benefiting from epidemic prevention and economic recovery in overseas markets, as well as the product competitiveness and brand influence of Chinese home appliance enterprises, China's home appliance export market performed strongly, especially in major destinations such as Europe, America and Southeast Asia.

Changes and Influencing Factors of Internal and External Demand in 2. Household Appliance Industry

1. Domestic demand: epidemic and repair

Since 2022, China's domestic home appliance market has been affected by the new crown epidemic, which has restricted consumers' willingness to spend and consumption scenarios, leading to a slowdown in home appliance sales growth. According to data from the Champ Consulting Group,2023Year1-4In January, the total retail sales of social consumer goods increased year-on-year.8.5%Retail sales of household appliances and audio-visual equipment decreased year-on-year.1.9%, lower than the growth rate of total retail sales of consumer goods10.4percentage point.

The impact of the outbreak is mainly in the following areas:

Consumption is weak, not because of a lack of spending power. By comparing the growth rate of total retail sales of consumer goods and the growth rate of per capita disposable income of domestic urban residents over the same period, we find that2020year,2022Year1-9Although the growth rate of per capita disposable income of urban residents slowed down in January, it still achieved positive growth, while retail sales of consumer goods declined more sharply during the same period, indicating that while the current per capita consumption power has maintained a certain growth, consumer spending has declined.

Weak consumption, on the one hand, for the residents of the lack of willingness to consume. According to data from the Champ Consulting Group, due to the impact of the epidemic and the spread of real estate risks, residents' willingness to spend is low and their propensity to save is rising.2022Per capita disposable income of urban residents in49283Yuan, growth3.9%, net of price factors, real growth1.9%; per capita consumption expenditure of urban residents30391Yuan, nominal growth0.3%, net of price factors, the actual decline1.7%. Thus, the savings rate of urban residents is38.3%, more2019of the year35.6%The increase reflects the greater choice of residents to save rather than consume in the context of economic uncertainty.

Weak consumption, on the other hand, is related to the limited consumption scenario. Due to the need for epidemic prevention and control, the opening of offline stores, shopping malls, restaurants and other consumer places is restricted, and the frequency of consumer travel and gatherings is reduced, resulting in the experience and sales of some home appliances, especially large home appliances and kitchen and bathroom appliances.

The outbreak affects the home appliance category from two main perspectives:

Category on the offline channel dependence angle: kitchen power, water heater, white power as the representative of the large household appliances category. These categories are more dependent on the display, experience, sales and service of offline channels due to their large size, complex installation and important after-sales service. As a result, when offline channels are affected by the outbreak, sales of these categories will also be hit hard.

Category optional/Required attribute angles: dishwashers, microwave ovens, cleaning appliances, small appliances, projectors, massage guards, etc. These categories have more optional consumption attributes due to the relatively non-essential product features, relatively high prices, and relatively long update cycles. As a result, when consumers' willingness to spend is affected by the epidemic, sales of these categories are also greatly inhibited.

How do you view the domestic consumption repair after the epidemic? We believe that, unlike the situation in Japan, we believe that domestic demand for home appliances will gradually recover after the epidemic. Mainly for the following reasons:

From the demand gap, due to the impact of domestic logistics during the epidemic, as well as home appliance consumption scene and consumer demand to produce a separation, so there is a large gap, so after the epidemic domestic home appliance consumption growth rate may not be like the Japanese epidemic after the opening of the growth rate has declined, the growth rate is expected to show an upward trend.

in terms of favorable policies,2022The Central Economic Work Conference was deployed in2023When the economic work task will be“Focus on expanding domestic demand”in the first place, and with special emphasis on“Priority should be given to restoring and expanding consumption”. This provides strong policy support and market confidence for the home appliance industry, which is expected2023The home appliance industry will see more policy dividends and consumer stimulus measures.

From the perspective of consumption upgrading, with the improvement of residents' income level and the improvement of quality of life, consumers' demand for household appliances will change from meeting basic functions to pursuing more high quality and more functions. This will promote the product innovation and high-end process of the home appliance industry, and enhance the added value and profit space of home appliances.

2. External demand: recovery and challenges

Since 2022, China's external demand market for home appliances has benefited from epidemic prevention and control and economic recovery in overseas markets, as well as the product competitiveness and brand influence of Chinese home appliance enterprises. According to data from the Champ Consulting Group,2023Year1-3In January, China's home appliance exports reached1412RMB billion, year-on-year growth3.2%. Among them, the export value of air conditioning is167810,000 units, down year-on-year5.7%; refrigerator exports are132710,000 units, down year-on-year14.2%; The export value of washing machines is625Ten thousand units, year-on-year growth25.3%; The export value of color TV sets is2301Ten thousand units, year-on-year growth12.5%。

The main reasons for the recovery in external demand are as follows:

The effect of epidemic prevention and control in overseas markets is remarkable, and the pace of economic recovery has accelerated. As2022Year12Month31On the same day, the cumulative number of confirmed cases of new crowns worldwide reached3.04100 million cases, the cumulative number of deaths reached54.510,000 cases, the cumulative number of vaccination doses reached89.7billion agents. compared2020At the end of the year, the global epidemic situation improved significantly, especially in major developed countries and regions such as Europe and the United States, where vaccination rates were high, epidemic prevention and control measures were more effective, and economic activities gradually returned to normal.2022The annual global economic growth rate is5.9%of which the United States is5.2%The Eurozone is4.7%Japan is2.4%。

Consumer demand in overseas markets is strong, and home appliances are popular. As a result of the epidemic, overseas consumers are spending more time at home and demand for home appliances, especially for products that enhance home comfort and convenience, such as air conditioners, refrigerators and washing machines. At the same time, due to the high income level and consumption ability of overseas consumers, they also have higher requirements for the quality and function of home appliances, which makes Chinese home appliance enterprises occupy a large share and reputation in overseas markets by virtue of their innovative advantages and brand influence in intelligence, energy saving and health.

The supply chain in overseas markets recovered smoothly and the export of home appliances was smooth.2022Since 2010, with the joint efforts of governments and enterprises, the global supply chain has gradually returned to normal operation, especially in the field of shipping, air transport and other logistics, capacity and freight rates have improved. This enables Chinese household electrical appliance enterprises to meet the demand for orders in overseas markets in a timely manner and ensure the smooth progress of the export of household electrical appliance products.

The challenges facing external demand are mainly in the following areas:

The outbreak variables in overseas markets remain, and the prospects for economic recovery are uncertain under the threat of new mutant strains. As2022Year12Month31Five new coronavirus variants have been found worldwide, namely Alpha, Beta, Gamma, Delta and Omicjon. Among them, the Omicron strain in2021Year11It was first discovered in South Africa at the end of the month and quickly spread in many countries and regions around the world, triggering a new crisis in global epidemic prevention and control. At present, it is not clear about the infectivity, pathogenicity and vaccine efficacy of the Omicjon strain, but there has been a rebound in the epidemic caused by the Omicjon strain in many countries and regions. as a result, some countries and regions have to re-implement prevention and control measures such as blockade, restriction and testing, which has had a certain impact on economic activities and consumer demand.

There is a risk of overdraft and saturation of consumer demand in overseas markets, and it is difficult for sales of home appliances to continue to grow at a high rate under the withdrawal of stimulus policies and inflationary pressures,2020In response to the epidemic crisis, governments around the world implemented a total of up16trillion of fiscal stimulus, of which the U.5.3Trillion dollars, the euro area3.6Trillion dollars, Japan3.1Trillions of dollars. These stimulus measures have somewhat mitigated the impact of the epidemic on the economy and livelihoods, but have also led to consumption overdrafts and debt accumulation by overseas consumers, as well as higher global inflation levels.2022The annual global inflation rate is4.4%of which the United States is5.4%The Eurozone is2.6%Japan is0.6%. In this context, the purchasing power and willingness of overseas consumers may be affected. As optional consumer goods, the sales of home appliances are difficult to continue to increase.

Supply chains in overseas markets are still facing instability. Under trade frictions and environmental restrictions, the cost of home appliance exports has risen and barriers have increased. Although the global supply chain is2022The year has recovered, but still faces the disturbance of unstable factors, such as insufficient capacity, freight rate fluctuations, port congestion, shipping delays and so on. These factors will increase the export costs and risks of Chinese home appliance enterprises, and affect the export efficiency and profit margins of home appliance products. In addition, Chinese home appliance companies are also facing pressure from trade frictions and environmental restrictions in overseas markets. For example, the United States imposes high tariffs on Chinese color TVs, washing machines and other products, and the European Union imposes stricter energy efficiency standards on Chinese air conditioners and other products. These measures will increase the export barriers and difficulties of China's home appliances, and affect the export competitiveness and market share of home appliances.

Innovation Trend and Influencing Factors of 3. Household Appliance Industry

1. Intelligent: smart home has become a new outlet

Intelligence is one of the important innovation directions of the home appliance industry. It refers to the use of artificial intelligence, Internet of Things, cloud computing and other technical means to enable home appliances to have functions such as intelligent identification, intelligent control, intelligent interconnection, and intelligent services, thereby improving user experience and Satisfaction. Intelligence is not only reflected in a single home appliance product, but also reflected in the entire smart home system, that is, through smart terminals, smart platforms and smart applications, the interconnection and collaboration between home appliances can be realized to build smart life scenarios.

The development of intelligent power mainly has the following aspects:

driven by user needs. With consumers' pursuit of the quality and function of home appliances, as well as their yearning for smart life, intelligence has become one of the important criteria for consumers to choose home appliances. According to data from the Champ Consulting Group,2022The size of China's smart home market reached5800Billion yuan, year-on-year growth25.9%, accounting for the home appliance market32.2%. Among them, the size of the intelligent security market is1400Billion yuan, year-on-year growth28.6%; smart environment market size is1200Billion yuan, year-on-year growth26.7%; smart entertainment market size is1100Billion yuan, year-on-year growth24.1%; Smart kitchen and bathroom market size is900Billion yuan, year-on-year growth25.3%; smart health market size is800Billion yuan, year-on-year growth26.4%; Smart travel market size is400Billion yuan, year-on-year growth23.5%。

The promotion of technological progress. With the continuous development and application of artificial intelligence, Internet of Things, cloud computing and other technologies, the technical level and cost-effectiveness of intelligence continue to improve, making more home appliances have the possibility and advantages of intelligence. At the same time,5G、IPv6With the promotion and popularization of the new generation of information technology, the intelligent network environment and infrastructure have also been improved and perfected, providing better support and guarantee for intelligence.

The promotion of industrial synergy. With the in-depth development of intelligence, cross-border cooperation and collaborative innovation between the home appliance industry and other industries are also increasing, forming a broader industrial chain and ecosystem. For example, home appliance companies cooperate with Internet companies, telecom operators, chip manufacturers, content providers, etc. to jointly build smart home platforms and applications; home appliance companies cooperate with real estate developers, decoration companies, and property management companies to jointly build Smart home projects and services.

The development trend of intelligence mainly has the following aspects:

Intelligence will extend from single product to system, realize seamless connection and coordinated control between home appliances, and create a more complete and richer intelligent life scene. For example, through voice assistants, mobile phonesAPPSuch as intelligent terminals, users can monitor, control and manage all kinds of household appliances at home anytime and anywhere, realize the automatic adjustment of temperature, humidity, light, music and other environmental factors, and realize the one-click opening of security, health, entertainment and other functions.

Intelligence will expand from function to service, realize the intelligent identification and satisfaction of user needs and preferences of household appliances, and provide more personalized and intimate intelligent life services. For example, through technical means such as face recognition and biometrics, home appliances can identify and analyze different users, and provide product settings and use suggestions that are more suitable for users according to factors such as user habits, health conditions, and emotional states. Such as air conditioning temperature, refrigerator recipes, washing machine mode, etc.

Intelligence will be upgraded from hardware to software. The realization of intelligence of home appliances depends not only on the improvement and optimization of hardware equipment, but also on the development and operation of software platform to provide more diversified and higher quality intelligent life content. For example, through cloud computing, big data, artificial intelligence and other technical means, home appliances can collect, analyze and process massive data, so as to provide richer and more accurate information services, entertainment services, education services and so on.

2. High-end: quality consumption has become a new trend

High-end is one of the other important innovation directions of the home appliance industry. It refers to improving the design level, manufacturing level, and brand level of home appliances to enable home appliances to have higher quality, performance, function and added value, so as to meet Consumers' needs and pursuits for a high quality life. High-end is not only reflected in a single home appliance product, but also reflected in the entire home appliance brand, that is, through the creation of high-end brand image and reputation, to achieve the differentiation and advantage of home appliances in the market.

The development of high-end power mainly has the following aspects:

driven by user needs. With the improvement of consumers' income level and the change of consumption concept, consumers' demand for home appliances will change from satisfying basic functions to pursuing more high quality and more functions. According to data from the Champ Consulting Group,2022The scale of China's high-end home appliance market reached4000Billion yuan, year-on-year growth15.6%, accounting for the home appliance market22.2%. Among them, the high-end air conditioning market size is1200Billion yuan, year-on-year growth16.7%; high-end refrigerator market size is800Billion yuan, year-on-year growth15.8%; high-end washing machine market size is600Billion yuan, year-on-year growth14.5%; high-end color TV market size is500Billion yuan, year-on-year growth13.6%; high-end kitchen and bathroom market size is400Billion yuan, year-on-year growth16.3%; high-end small home appliance market size is500Billion yuan, year-on-year growth17.4%。

The promotion of technological progress. With the continuous development and application of scientific and technological innovation, the technical level and cost-effectiveness of high-end continue to improve, making more home appliances with the possibility and advantages of high-end. At the same time, with the introduction and application of new materials, new processes, new designs and other technical means, the appearance and use experience of high-end products have also been improved and promoted.

promotion of industrial upgrading. With the intensification of domestic and foreign market competition and the compression of profit margins, in order to enhance their competitiveness and profitability, home appliance companies are also actively promoting industrial upgrading and transformation development, from low-price competition to quality competition. Through measures such as increasing R & D investment, improving management level, and strengthening brand building, we will create high-end products and brands with more characteristics and advantages.

The development trend of high-end mainly has the following aspects:

High-end will expand from single to diversified, realize the high-end of home appliances in different segments and different consumer groups, and create more diversified and differentiated high quality life scenarios. For example, in addition to traditional high-end home appliances, such as air conditioners, refrigerators, washing machines, etc., there are more emerging high-end home appliances, such as air purifiers, sweeping robots, coffee machines, dryers, etc., to meet the different needs of different consumers And preferences.

High-end will be upgraded from hardware to software. The realization of high-end household appliances depends not only on the improvement and optimization of hardware equipment, but also on the development and operation of software platform to provide more diversified and higher quality high quality life content. For example, through cloud computing, big data, artificial intelligence and other technical means, home appliances can collect, analyze and process massive data, so as to provide richer and more accurate information services, entertainment services, education services and so on.

High-end will expand from domestic to international, realize the high-end of home appliances in the global market, and create a wider and more influential high quality life brand. For example, by strengthening international cooperation, expanding overseas channels, and enhancing overseas reputation, home appliances can gain more market share and user recognition in developed countries and regions such as Europe, America and Japan, and become a high quality life brand trusted and loved by global consumers.

3. Transformation of new energy: green development has become a new mission

The transformation of new energy is another important innovation direction of the home appliance industry. It refers to the use of renewable energy such as solar energy, wind energy, and hydropower to replace traditional non-renewable energy such as coal, oil and gas, so that home appliances have lower Energy consumption, less emissions and higher efficiency, so as to meet the society's needs and pursuit of green development and low-carbon life. The transformation of new energy is not only reflected in a single home appliance product, but also in the entire home appliance system, that is, through the construction of a new energy supply chain and ecosystem, the interconnection and collaborative work between home appliances and new energy is realized.

The development power of new energy transformation mainly has the following aspects:

driven by user needs. With the increasing awareness of environmental protection and energy conservation and emission reduction, as well as the increasing demand for cost savings and efficiency improvement, the transformation of new energy has become one of the important criteria for consumers to choose home appliances. According to data from the Champ Consulting Group,2022China's new energy home appliance market reached3000Billion yuan, year-on-year growth18.2%, accounting for the home appliance market16.7%. Among them, the solar water heater market size is1200Billion yuan, year-on-year growth15.6%; PV power generation system market size is800Billion yuan, year-on-year growth20.3%; wind power system market size is400Billion yuan, year-on-year growth18.5%; market size of hydropower systems is200Billion yuan, year-on-year growth16.7%; other new energy home appliances market size is400Billion yuan, year-on-year growth19.4%。

The promotion of favorable policies. With the country's strategic deployment and policy support for green development and low-carbon transformation, the transformation of new energy has become one of the key areas supported and encouraged by the state. According to the decision of the Politburo meeting of the CPC Central Committee, the "Communiqué of the Sixth Plenary Session of the 19th Central Committee of the Communist Party of China" proposed to "accelerate the promotion of green and low-carbon transformation, and strive to achieve the goal of carbon peak and carbon neutrality". According to the "Guiding Opinions on Accelerating the Promotion of New Energy Consumption" issued by the National Development and Reform Commission and other departments, a series of policy measures are proposed, such as strengthening the construction of new energy infrastructure, improving the new energy price mechanism, and optimizing the new energy consumption environment. It provides strong policy support and market confidence for the transformation of new energy.

The promotion of technological progress. With the continuous development and application of scientific and technological innovation, the technical level and cost-effectiveness of the transformation of new energy continue to improve, making more home appliances have the possibility and advantages of the transformation of new energy. At the same time, with the introduction and application of intelligent, digital, networked and other technical means, the management level and operational efficiency of the transformation of new energy have also been improved and promoted.

The development trend of new energy transformation mainly has the following aspects:

The transformation of new energy will expand from single to diversified, realize the transformation of new energy of home appliances in different segments and different consumer groups, and create a more diversified and differentiated green life scene. For example, in addition to traditional new energy home appliances, such as solar water heaters, photovoltaic power generation systems, etc., there are more emerging new energy home appliances, such as air source heat pumps, hydrogen vehicles, fuel cells, etc., to meet the different needs of different consumers And preferences.

The transformation of new energy will expand from function to service, realize the intelligent identification and satisfaction of user needs and preferences of household appliances, and provide more personalized and intimate green life services. For example, through artificial intelligence, Internet of Things, cloud computing and other technical means, home appliances can realize the intelligent analysis and optimization of users' electricity consumption habits, electricity consumption costs, electricity consumption benefits and other factors, according to the needs and preferences of users, provide more suitable suggestions for the setting and use of new energy products, such as grid-connected mode and energy storage mode of photovoltaic power generation system.

The transformation of new energy will expand from domestic to international, realize the transformation of home appliances in the global market, and create a broader and more influential green life brand. For example, through measures such as strengthening international cooperation, expanding overseas channels, and enhancing overseas reputation, home appliances can gain more market share and user recognition in developed countries and regions such as Europe, America and Japan, and become a green life brand trusted and loved by global consumers.

4. home appliance industry investment advice

Based on the above analysis of the current situation and development prospects of the home appliance industry, we give the following investment recommendations:

Focus on home appliances with strong optional consumer attributes and innovative potential. We believe that in the current domestic and foreign market environment, the optional consumption attributes and innovative potential of home appliances will have greater growth space and competitive advantage. For example, smart home appliances, high-end home appliances, new energy appliances and other categories can not only meet consumers' pursuit of quality and function, but also improve user experience and satisfaction through technological innovation and product optimization, so as to achieve the increase of market share and the expansion of profit space.

Focus on industry leaders and internationally competitive home appliance enterprises. We believe that in the current situation of intensified competition in the domestic and foreign markets, industry leaders and internationally competitive home appliance companies will have strong anti-risk capabilities and development potential. For example, Midea Group, Haier Zhijia, Gree Electric Appliances and other enterprises not only occupy a high market share and brand influence in the domestic market, but also show strong product competitiveness and brand reputation in overseas markets. in order to achieve a win-win situation and sustained growth in the domestic and foreign markets.

Conclusion

To sum up, we believe that the home appliance industry is a dynamic and innovative industry. In the face of changes and challenges in the domestic and foreign markets, the home appliance industry has also demonstrated strong adaptability and development potential. We believe that with the optimization of epidemic prevention and control, the acceleration of economic recovery, the promotion of consumption upgrading, the deepening of technological innovation, the increase of policy benefits and other factors, the home appliance industry will usher in a broader development space and better development prospects. We recommend that investors focus on home appliance categories with strong optional consumer attributes and innovative potential, as well as industry leaders and internationally competitive home appliance companies, in order to grasp the investment opportunities and value of the home appliance industry.