By Zhou Lei
At present, problems of the oversupply of the refrigerators stand out. In spite of manufacturers' frequent price cutting and promotions in a bid to boost sales, consumers respond nonchalantly. Nonetheless, while sales of generic refrigerators stagnate, high-end refrigerators are selling surprisingly well.
The above-described signal from the refrigerator market is in fact an indication of the irresistible trend of household appliances upgrading. From this perspective, the development room for the refrigerator industry is still vast, and opportunities lie in structural growth.
The refrigerator market has been sluggish for quite a while, which greatly grieves many relevant companies. Recently, an industrial summit forum was held, and the theme of the forum was even set as "Looking for the Noah's Ark for the Refrigerator Industry 2012"
The phrase may be somewhat exaggerating, but it does reflect that the industry is indeed facing great difficulty currently. On one hand, production capacity of the refrigerator industry has grown too rapidly. According to the estimation made by China Household Electrical Appliance Association recently, the production capacity of refrigerator increased by more than 30 percent in a round of forceful capacity expansion of the household industry in 2009 and 2010.
Currently, the production capacity of refrigerator and refrigerator compressor have either exceeded or approached 100 million units. On the other hand, sales remain lusterless. Take urban markets as an example, in 2011, sales of refrigerator in key cities amounted to about 22.35 million units, an increase of merely 1.5 percent compared with the same period of the previous year. In the first quarter of this year, sales of refrigerator in key cities totaled at about 2.8 million units, the sales volume decreasing by 35.3 percent and the sales value by 33.8 percent year on year.
Presently, problems of the oversupply of the refrigerator industry stand out, and it's unrealistic to expect significant improvements of the market within the near future. Internationally, the slow recovery of the global economy and the negative influence of the European debt crisis are impediments to export growth; domestically, the continuous implementation of "household appliances going to the countryside" and other preferential policies, while significantly boosting refrigerator sales in rural areas, is also somewhat exhausting the consumption capacity of the market. All considered, after the rapid growth of the refrigerator industry in 2010, growth of the market has slowed down sharply, momentum for expansion is weak, and a new round of adjustment is about to kick off.
Under new market conditions, the refrigerator industry's previous approach of pursuing blindly after volume advantage is no longer working. At the moment, in spite of manufacturers' frequent price cutting and promotions in a bid to boost sales, consumers respond nonchalantly. The reason is that currently the market is sustained mainly by rigid demands. Consumers have high requirements for the class, quality, and functions of the products. Price is not their top concern. Firsthand market feedbacks show that while sales of generic refrigerator stagnate, high-end refrigerators are selling surprisingly well. In the first quarter of this year, refrigerators with three and more doors account for 36.17 percent of total sales in key cities, and side-by-side refrigerators account for 9.24 percent, these two categories combined accounting for more than 45 percent of all sales, 4.67 percentage points higher than that in 2011.
The above-mentioned signal from the refrigerator market is in fact a reflection of the general trend of the upgrading of household appliance consumption. According to the targets stated in the development plan during the 12th Five-year Plan of the household electrical appliance industry: during the 12th Five-year Plan, high added-value and high-end products should be developed for major household appliances; development of the refrigerator industry should focus on large-volume multi-door and multi-compartment refrigerators, such as windy refrigerator and inverter refrigerator; the market share of high-end products, including large-volume, multi-door, and side-by-side refrigerators, in the domestic market shall increase from 10 percent now to 30 percent.
Recently, the government has promulgated policy measures that aim to promote energy-saving household appliances, allocating financial subsidy of RMB 26.5 billion Yuan for qualified air conditioner, flat-screen TV, refrigerator, washing machine, and water heater. Boosted by policy, the popularization of high energy efficiency refrigerators will be accelerated. Therefore, the development space for the refrigerator industry is still vast, and opportunities lie in structural growth.
New market opportunities seem tempting, but the key is how to grasp them. Refrigerator companies need to study the market carefully, make solid efforts to carry out structural adjustment, increase products R&D investment, continuously improve products quality, attach more importance to mid-end and high-end products, and strength the influence of their brands. Only this way can they stand out in the high-end market filled with multinational tycoons. In this regard, Haier has set an example for the industry. With strategic insight, Haier has carried out solid structural adjustment long ago, wining reputation and market share in the high-end market with its first-rate products. Its growth against the trend attracts great attention from the industry. We hope that with the deepening of structural adjustment in the refrigerator industry, more companies like Haier would emerge and the spring for the market would come sooner.
