The post-policy era of home appliances: The diminishing effect of policies has become apparent

Yesterday, the implementation of the fixed-frequency air-conditioning "energy-saving benefits" subsidy policy for two years expires. Consumers will no longer enjoy the national "250 yuan" "energy-saving benefits" subsidy for fixed-frequency air-conditioning. For air-conditioning companies that are under pressure from rising raw material costs, they can only increase prices to maintain profits. In fact, from March this year, many air-conditioning companies have begun to quietly raise prices. The industry believes that air-conditioning prices are likely to be raised to pre-subsidy prices. This means that the stimulating effect of energy-saving benefits for the air-conditioning industry will completely disappear. What air-conditioning companies are now facing is how to open up a new path for the air-conditioning market that is more saturated than two years ago, so that enterprises can still maintain rapid growth?

The home appliance trade-in policy will expire at the end of this year, and home appliances to the countryside will also expire at the end of next year. Several major policies to promote the prosperity of the home appliance industry are about to expire.

“In 2009, we described China’s economic situation as the most complex year. 2010 was defined as the most difficult year. In 2011, we suddenly discovered that this is the most complicated and most difficult year.” Last week in the Consumer Electronics Association. At the 2011 China Refrigeration Industry Summit Forum, Wang Lei, deputy director of the China Household Electrical Appliances Association, said: "In 2009, China's home appliance industry benefited from home appliances to the countryside and trade-in support. In 2010, the industry continued its path dependence. Now the industry faces more obstacles and challenges."

“After entering the post-policy era of the home appliance industry, home appliance companies will face a problem: how to make the performance continue to grow rapidly,” said industry expert Liu Heqing.

The three major policies brought about a surge in performance.

In December 2007, the first batch of home appliances to the countryside policy pilot, the state gave 13% of the product price subsidies to the countryside. Afterwards, the government adjusted the policy several times and successively extended the policy to the whole country. The number of products in the countryside has increased from 3 in the past to 10 in the past. The number of models of products has increased from the initial 10 to 80, and the ceiling price of products for the countryside has also continuously increased.

The countryside policy has immediate effects on the sales of household appliances. According to data released by the Ministry of Finance, at the end of October 2008, the first batch of pilot three- and one-city sales subsidy “home appliances to the countryside” exceeded 3.5 million units. Sales of home appliances increased by 30% year-on-year.

In the following two years, the number of products sold in the countryside has doubled. In 2009, the cumulative sales of home appliances to the countryside were 37.67 million units, amounting to 69.7 billion yuan. In 2010, the country's total sales of home appliances to the countryside totaled 77.18 million units, with sales of 173.2 billion yuan.

In May 2009, the state also launched the trade-in and energy-saving subsidies projects. According to public information, in 2009 the central government arranged for 2 billion yuan in funds to be used for subsidies for home appliances. As of the end of October 2009, the central government has allocated 808 million yuan in subsidies for air-conditioning energy-saving subsidies. The average selling price of air-conditioning prices dropped from 3,000 to 4,000 yuan per unit to around 2,000 yuan.

Inspired by the national policy, in the previous three years, Chinese home appliance companies embarked on a hurricane-rushing development path. According to data from Zhong Yikang, in the past three years, the home appliance industry has maintained a high growth rate of over 20% per year, benefiting from three stimulus policies for home appliances.

Taking Chigo as an example, in 2009 Shigao Financial reported that, benefiting from policies such as high-efficiency energy-saving subsidies and home appliances to the countryside, Chigo’s domestic sales surged by 60% in the second half of 2009, and profit during the year was 314 million yuan, a year-on-year increase of 230%.

In 2010, Chigo's turnover soared to 8.468 billion yuan, an increase of up to 41%, of which subsidies for energy-saving products increased to 810 million yuan, an increase of nearly 250%. Li Gaohao, chairman of Zhigao, even released a rhetoric that Chih-Gao's annual output value will exceed 100 billion yuan in the next five to ten years.

In addition, Gree, Midea, Qingdao Haier, Hisense Kelon and other home appliance companies have maintained revenue growth of more than 30% in 2010, and their net profit has remained above 40%. Last year, Hisense Kelon’s net profit increased by 274% year-on-year.

“In 2007, the home appliance industry was in a depression, and companies hardly had any voice. However, after the introduction of the home appliance stimulus policy in 2009, the industry could be described as a hundred schools of thoughts and a hundred schools of thought. It was very lively,” said the home appliance industry source.

Decrease in policy effects has become apparent

The diminishing effect of home appliance policies has already appeared in the first quarter of this year.

Cai Ying, Assistant Director of the Information Resource Development Department of the National Information Center, said that in terms of overall scale, domestic refrigerator sales in 2010 were 23 million units, an increase of 28.95% year-on-year. However, sales growth in the first quarter of 2011 was 8.24%, with sales of about 4.3 million units.

“Many companies feel that the increase in the first quarter of 2011 is not very satisfactory, and the entire market feels that the market conditions are not very good.” Cai Ying said, “The diminishing effect of the policy is emerging. With the continued increase in the number of home appliances, the promotion of the policy. The diminishing effect is very normal. Home appliance companies should not expect this year's sudden and explosive growth like 2008 and 2009."

According to statistics from the two major market research institutions of China Yikang and Ovid Consulting, sales growth of the home appliance market slowed down significantly in the first quarter of this year, with an average increase of only 1.7%. The growth of the home appliance market last year was around 20%. Zhongyi Kang expects this year's home appliance market will not increase by more than 10%.

An industry source stated that the home appliance policy also stimulated the industry to generate false prosperity. "A lot of companies to obtain state subsidies, fraudulent fraudulently subsidizing state subsidies. Making businesses and industries false and prosperous, but actually cause a lot of inventory, accumulate in various sales links. Manufacturers, distributors, agents at all levels, to jointly bear the consequences. ”

â–  Review

The company frequently expands its production capacity With the support of beautiful financial reports, in recent years, household appliance companies, especially white companies, have frequently opened factories and increased production capacity.

In 2010, Midea established Hebei Handan Air Conditioning Production Base and Midea Nansha Industrial Park, producing intensive air conditioners, refrigerators and Little Swan Guangzhou Nansha New Industrial Park. In September last year, Midea reached an agreement with the Hefei Municipal Government to invest 2 billion yuan in construction. The largest central air-conditioning production base in China.

Another white giant Gree's expansion rate is not inferior. At the end of 2009, Gree's Hefei production base went into production. In 2010, Gree successively built Zhengzhou Industrial Park and Wuhan Industrial Park in China. The formation of five major industrial parks in China.

Wang Lei believes that the current challenge for companies is not capacity, but the scale of market demand. Taking the refrigerator as an example, last year the market size and consumption scale of the refrigerator industry reached a new historical height, with an annual output of more than 73 million units, an increase of 23% year-on-year. Wang Lei said, “This means that among the 400 million households in China, between 8% and 10% of households purchase refrigerators every year, and this proportion is unlikely to increase. With the implementation of home appliances to the countryside, the level of rural market popularity has rapidly increased to 50%, the marginal effect of policy effect is declining, and the effect of the property market policy on the impact of household appliances in large and medium-sized cities will also begin to appear this year."

â–  Prospects

Or will enter the era of price war, "now the home appliance market, too many small businesses, from the end of last year, home appliances to the countryside can be seen in the tender. There are more than 100 refrigerator companies involved in the tender, and mature markets can not have so many brands. This market must undergo a big reshuffle, just like the air-conditioning industry," said Liu Heqing.

After 20 years of development, the air-conditioning industry in China has plummeted from the most active 400 companies to more than 20 in the 2010 air-conditioning refrigeration year.

Cai Ying believes that the most direct way to reshuffle the home appliance industry is the price war.

Data shows that from May to August last year, the average price level of the refrigerator market reached the lowest point in the industry. The average price in June last year was 2,556 yuan, and it began to recover in October. Cai Ying said, “From the trend embodied by the curve, from May to August this year, the price competition in the industry will be very intense.”

“The average price of refrigerators will fall this year. It is estimated that the average price of refrigerators in 2011 will be lower than 3,000 yuan, the average price of three refrigerators or more will fall by 3800 yuan, and the price of door-opening refrigerators will return to about 7,200 yuan.” said Cai Ying. .

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