Shanghai — Following two consecutive years’ downturn, China’s refrigerator market continued to decline with a 1% drop in sales between 2015 and 2016 CNY 84bn ($12bn), figures from major producers show.
Sales volumes were more resilient than revenues with a 3.5% increase to 32 m units. Freezers had flat sales at 7 m units in 2016; but prices fell as revenues were down in the sector by 8% compared with 2015 to CNY 9.6bn.
The country’s five largest listed refrigerator makers, however, still reported growth last year against market headwinds.
Qingdao Haier, leader of both the China and the global markets, posted a 3% rise in underlying 2016 refrigerator sales to CNY 28.5bn. This equates to a 31% rise to CNY 36.3bn when the business units of GE Appliances, which Haier acquired last year, are included.
Midea Group has replaced Hisense Kelon as the second largest listed fridge maker, up following a deal to acquire majority of Toshiba’s home appliance business which closed in mid-2016. The company’s refrigerator sales increased by 31% in 2016 to CNY 15bn. The company is followed by Hisense Kelon and Meiling both with double-digit growth in 2016 and Homa with stable sales.
|2016 Fridge (incl. freezer) sales|
|Company||CNY m||% Growth YoY|
|Qingdao Haier||36 254||31|
|Midea Group||14 956||31|
|Hisense Kelon Electrical Holdings 1||12 779||11|
|Guangdong Homa Appliances||4710||0.5|
|1 Including washing machines.|
High-end products, multi-door, French-door and smart refrigerator sectors, spearheaded the growth in 2016 in the Chinese market. Multi-door refrigerators showed 52% year-on-year sales value increase in 2016. China’s rising disposable income per capita, contributed to the consumption upgrade. This grew by around 8% in 2016 to nearly CNY 24,000.
All the top five listed refrigerator makers reported higher gross margins for the domestic market last year, the biggest difference compared with overseas market being Homa’s 17% gap.
While Meiling’s refrigerator facility in Pakistan and Haier’s in Russia came on stream last year, China’s market leaders have been cautious over the past few years about new projects at home. An exception is Meiling’s 800,000 unit/year upgrade project in Mianyang, Sichuan. This started making energy-saving, CFC-free refrigerators in March.
Given that around 100m of China's population is expected to migrate from rural to urban areas by 2020, some of the top refrigerator makers are optimistic that the country’s booming real estate market will drive up appliance consumption.
Research firm China Market Monitor warns that because of high prices in the Chinese housing market, a majority of property purchases are for investment. Even if these are furnished for the rental market, this usually involves second hand or low-end appliances.
According to China Market Monitor, 2017 is likely to see a 1.3% drop in China’s refrigerator sales volume to 31 million units and a 1.2% drop in value to CNY 81bn. Freezers are forecasted to have stable sales value and a 3.4% increase in volume.
Exchange Rates: Xe.com 9 May, 2017