What opportunities are there to seize after the accelerated recovery of household appliance exports?

Unlike the fluctuating trend of the domestic home appliance market transitioning from "Λ" to "N", although the home appliance export market has had an unfavorable start since 2023, it has always been an upward sloping curve along the way. Especially since Q3, with the gradual increase in demand in the overseas home appliance market, the decline in inventory has led to a significant rebound in home appliance exports. Looking ahead to the future, although external uncertain risk factors still exist, the industry and enterprises are generally optimistic about the trend of the home appliance export market in the fourth quarter and the future. Although the chill persists, spring is within reach, "a person in charge of a home appliance enterprise summarized to a reporter from China Home Appliance Network.

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In the first three quarters, the main tone was "repair"

Since the second half of last year, the home appliance export market has been relatively weak, especially in the European and American markets, which continued until the first quarter of this year. From the perspective of foreign trade orders, there has been an improvement since May and June this year, "said Chen Kaibin, the head of Glanz's overseas business. As mentioned, the repeated COVID-19 pandemic, high overseas inflation, and geopolitical factors in 2022 have led to significant pressure on China's home appliance exports since the second half of last year, which continued into the first quarter of 2023 and even the entire first half of the year.

In the first quarter of this year, according to the export data of six major home appliance categories and 37 products monitored by the China Chamber of Electrical and Mechanical Commerce, the export volume of large home appliances, kitchen and bathroom home appliances, and kitchen small home appliances decreased simultaneously, while the export of personal care home appliances showed a trend of "quantity reduction and price increase". By the end of the first half of the year, the export volume of domestic appliances in China had slightly increased compared to the same period last year. However, for different categories, the export volume of key categories such as air conditioners, refrigerators, washing machines, televisions, microwaves, and vacuum cleaners had increased by -1.5%, 1.4%, 40.6%, 9.5%, -3.6%, and 2.3% respectively. The export volume had also increased by 0.4%, -3.3%, 29.3%, 10.6%, -4.7%, and 2.3% respectively. Except for a few categories such as washing machines, televisions, and vacuum cleaners that performed well, the export volume data of most large and small electric products showed slight fluctuations and differentiation.

This year's home appliance export market is mainly in a state of 'repair', "the person in charge of a certain home appliance company's refrigerator business told a reporter on China Home Appliance Network. In 2023, the company's refrigerator and other home appliance business gradually rebounded from the bottom. By the first half of this year, its refrigerator export volume had reversed the decline. Although the export volume was still in a declining state due to various cost pressures, it was revealed that after entering the third quarter, the company's ice box business volume recovery trend accelerated and improved.

Throughout the first three quarters, based on RMB settlement, according to statistics from the China Home Appliances Association, the export volume of China's home appliance industry increased by 1.4% year-on-year. If we look at each quarter, the export of household appliances has shown a gradual recovery trend, and the repair speed of export volume is relatively fast. Among them, it decreased by 5.2% in the first quarter; 1.1% growth in the second quarter; Growth of 2% in the third quarter. From a category perspective, the export of refrigerators increased in both quantity and value in the first three quarters, while the cumulative export value of air conditioners continued to decline. The categories of washing machines, electric shavers, hair dryers, and electric irons have seen double-digit export volume and growth rate since the beginning of the year.

The home appliance export market has continued to improve from a low base, and various enterprise performance levels have also responded. In terms of electricity, Midea Group's foreign revenue in the first half of the year was 80.536 billion yuan, accounting for 40.88% of its total revenue. In the third quarter report, although Midea did not mention specific export revenue data, according to the research report of Guoxin Securities, Midea's air conditioning export sales increased by 12% year-on-year from July to August. Midea's air conditioning export growth rate was relatively fast in the first three quarters, and its ice washing business export performance was impressive. From the semi annual report, Haier Zhijia's overseas business accounts for about 50% of its total revenue. In the new third quarter report, Haier mentioned that by continuously deepening its high-end brand creation strategy, the company's overseas business continues to outperform the industry. Among them, in the European market, Haier's brand has achieved a 35% increase in revenue by listing embedded high-end series design new products. Hisense Group achieved overseas revenue of 62.3 billion yuan in the first three quarters, accounting for 42% of its total revenue.

Driven by the rebound in the export market in the third quarter, some small home appliance enterprises have also started to recover their revenue. For example, Stone Technology's net profit in the first three quarters increased by 160.38% year-on-year. The company stated that the recovery of overseas business has driven Stone Technology's net profit growth. Due to the release of the elasticity of export sales growth rate, Subor has even recently raised the estimated sales amount of related party transactions with overseas legal entity SEB for the year 2023, from 5.06 billion yuan at the beginning of the year to 5.82 billion yuan, an increase from 8.2% to 24.6% year-on-year growth compared to the actual amount in 2022.

The possible reason for the rebound or growth of export data in the third quarter is that the overall international economic situation is declining, consumers' sensitivity to consumption value is increasing, and overall consumption behavior tends to be conservative. In the third quarter, there were many promotion nodes in overseas markets, "the relevant person in charge of Tianke pointed out to reporters through analysis. For example, Amazon Prime Membership Day in July covers 25 countries, and consumers often choose to concentrate their consumption during this time period, which will have an impact on the overall pace of exports. As for Tianke, according to the semi annual report of its parent company, Kovac Group, the overseas business revenue of the Kovac brand increased by 26.5% year-on-year in the first half of the year, and the overseas business revenue of Tianke brand increased by 24.2% year-on-year, accounting for 34.3% and 30.9% of their respective revenue respectively. On the basis of the growth in the first half of the year, the relevant person in charge of Tianke stated that the export volume of Tianke continued to grow in the third quarter, and the sales performance was satisfactory.

Looking ahead to the future, is the 'recovery' sustainable?

For the continuous positive trend of the home appliance export market in the first three quarters, Si Mingming, the Director of the Information Consulting Department of the China Home Appliances Association, analyzed and pointed out to a reporter from China Home Appliances Network that the main reasons are the easing of overseas inflation pressure and destocking pressure, as well as the continuous strengthening of overseas business and exhibition activities, cross-border e-commerce, and the promotion of stable foreign trade policies by enterprises. In Siming Ming's view, the sustainability of this "recovery" situation is relatively certain. In the fourth quarter, there will be a more significant base effect, and it is expected that the export volume of the home appliance industry will reverse last year's decline and achieve positive growth throughout the year

Several people from home appliance companies have also expressed their optimism towards the future of the home appliance export market to reporters. The main reason for optimism is that they believe there are still many opportunities to seize in the home appliance export market. Firstly, in front of us, the "Black Five Net One" promotion is coming soon. Some home appliance companies claim that this will be the last opportunity to seize the peak season traffic of overseas home appliances at the end of the year. They have been intensifying their overseas stocking since October. The forecast report released by Huatai Securities also pointed out that considering the upcoming major promotion activities such as the "Black Five Net One" in the fourth quarter of the overseas market, coupled with the impact of last year's low base, the expectations for the export shipment of household appliances such as refrigerators and washing machines are optimistic.

In addition, under the pressure of export growth in European and American markets, RCEP and the "the Belt and Road" dual wheel drive is becoming a new growth point of China's household appliance exports. According to the data provided by the China Chamber of Commerce for Machinery and Electronics, from January to August this year, the export of Chinese white goods to the 10 ASEAN countries increased by 4.82% year on year, and the export to the regions along the the Belt and Road (excluding China) increased by 9.5% year on year. At the corporate level, the person in charge of Galanz told reporters that from January to August this year, Galanz's sales in the Russian market maintained double-digit growth, and its performance from September to October also continued to rise. Today, about 30% of Galanz's export sales come from the markets of countries along the "the Belt and Road", and its export products have expanded from microwave ovens to refrigerators, washing machines, dishwashers, water heaters and other health appliances. In addition, Hisense's sales revenue in countries along the "the Belt and Road" from January to August also increased by 12% over the same period. It is understood that the overseas companies, offices and other businesses of the enterprise have covered 126 countries along the "the Belt and Road". In addition, Midea, Haier, TCL, Konka, Changhong, Wanhe, Xinbao and other brands have successively laid out the construction of relevant production bases in ASEAN region and countries along the "the Belt and Road", hoping to accelerate the internationalization process through the advantages of localized production, localized supply chain and so on.

For regions with relatively weak performance such as Europe and the United States, as the destocking cycle in the region gradually ends, some analysts predict that China's home appliance exports to the region may experience a rebound. Taking Xinbao as an example, its sales in the European and North American markets currently account for about 40% of its overall export sales. In the first half of the year, influenced by high inventory and weak demand in Europe and America, Xinbao's overseas revenue decreased by 14.42% year-on-year. With demand repairing, the company's overseas performance has achieved a "positive" growth since the third quarter (Xinbao's overseas revenue increased by 2.15% year-on-year in the first three quarters). In recent years, Hisense, which has achieved successful international layout, saw a year-on-year increase of 22.22% in its overseas revenue in the first half of the year. Hisense's private brand business continued to grow, with North America, Europe, and others contributing significantly to the market. This is a result of our long-term investment, including our acquisition of companies such as Gorenje in Europe, and there may be some acquisitions in the future, "the head of the white electricity business of Hisense Home Appliances Group told reporters. In addition to their long-term investment in their own brands, they maintain the bottom line of" quality reliability "in their products, By enhancing core cost competitiveness and innovating differentiated selling points such as intelligence, we aim to seek greater development opportunities in the European and American markets.

Of course, the disturbance of overseas risk factors still exists. As the relevant person in charge of Tianke analyzed to reporters, future issues including overseas environmental standards and regulatory issues, quality and safety standards, technical standards, and supply chain management may all hinder the export of household appliances such as clean appliances. In terms of clean appliances, the person in charge predicts that the clean appliance industry will continue to maintain a trend of export growth in the fourth quarter, but there is still a possibility of a downward trend in the first quarter of next year. Tianke maintains a positive attitude towards the overseas market and expects the overall scale to maintain a relatively satisfactory growth this year and the next 1-2 years

In the short term, the risks faced by the export of household appliances mainly include overseas inflation, inventory cycles, wars, technical trade barriers, and other overlapping factors, "Si Mingming analyzed and pointed out to reporters. In the medium to long term, the global industrial and supply chains are facing reshaping, with more obvious trends of regionalization, localization, and diversification. At the same time, Southeast Asian countries represented by India and Vietnam, as well as Mexico, which has benefited from the United States' offshore outsourcing policy and is hot, have seized the opportunity to accelerate the attraction and acceptance of global labor-intensive industries and the transfer of low value-added links. The pressure on China's home appliance industry's export growth is becoming increasingly significant. However, based on the competitive advantages of the entire industry chain, digital iteration, deep cultivation of R&D innovation capabilities, and continuous penetration of overseas production capacity, channels, and brands in the Chinese home appliance industry, there is still significant development space for Chinese home appliance enterprises in the global market. However, it should also be noted that the future of globalization will also be more turbulent. Chinese home appliance enterprises need to strengthen their technological innovation capabilities and enhance their global business capabilities, while also strengthening their risk prevention and control