On December 27, 2023, Rongsheng Refrigerator, once known as one of the "Four Families of Chinese Refrigerators", ushered in its 40th anniversary celebration. A month earlier, Meiling Refrigerator, another member of the "Four Families", also held its 40th anniversary celebration in the Hefei factory. Dai Huizhong, chairman of Hisense Home Appliance Group, said: "Rongsheng's 40-year development history is the history of innovation in China's refrigerator industry. ”
This is not an exaggeration.
In the continuous innovation of mainstream enterprises in the past 40 years, China's refrigerator industry has not only achieved almost 100% household penetration rate, but also achieved excellent results in production and sales in 2023 in the state of almost all of the demand for stock replacement.
However, every milestone is a record and the beginning of the next journey. 2024 is coming, and the next 40 years of the refrigerator industry are quietly opening. The Chinese refrigerator industry, which is "not confused", should look at the "prosperity" in 2023 more rationally, because it hides sharp thorns, waiting for refrigerator companies to "overcome thorns".
The industry needs to pull out these hidden "thorns".
Exports drive both production and sales, and the support of the existing model is insufficient
Bidding farewell to the suppression of epidemic control in 2022, the refrigerator industry and the entire home appliance industry will usher in 2023 of economic recovery. However, a whole year has passed, and the overall recovery momentum of the home appliance industry is not satisfactory. In the first half of the year, the air conditioner was still making great progress, and the second half of the year also died down. However, the recovery momentum of the production and sales scale of refrigerators has been stable and prosperous for a whole year.
The data on the shipping side is extremely exaggerated. According to the statistics of the industry**, in January 2023, the sales volume of refrigerators was 797960,000 units, a year-on-year increase of 143%。Among them, the export volume was 400360,000 units, a year-on-year increase of 251%；Domestic sales were 39.76 million units, a year-on-year increase of 51%。
This set of data illustrates two intuitive scenarios.
On the one hand, the retaliation is obvious. Compared with the last year of the epidemic, the total production and sales scale of the refrigerator industry has shown a deep V-shaped trend. As shown in Figure 1, the sales volume of refrigerators in 2022 was only 75.58 million units, and after a surge driven by home demand in the first two years of the pandemic, it fell into the abyss of a year-on-year decline of nearly 13%, and the sales scale in the first 11 months of 2023 has already exceeded the level of the whole of 2019.
On the other hand, the overseas market has become the main driving force of the industry. As shown in Figure 2, after the sharp increase in exports in 2021 due to the global problem, the export scale will increase sharply year-on-year again in 2023, becoming the main driving force of the refrigerator industry. On the other hand, the domestic market has always fluctuated in the range of 5%.
To a certain extent, the driving force of China's market recovery has not met the expectations of the refrigerator industry at the beginning of the year, relying on the existing model to pull the export **, in terms of profit level and sustainability are lacking sufficient support.
After digesting high inventories in 2022, the European and American markets will have a strong willingness in 2023. This once again stimulated the export demand for Chinese refrigerators, but under the high interest rates caused by inflation and interest rate hikes, European and American consumption downgraded, and the demand for low-priced products increased significantly. In addition, China's aggressive expansion of emerging markets is also dominated by low-cost products. This means that China's refrigerator export profit level and product structure is unsatisfactory, in the confusing situation of the world, if the freight, raw materials and other aspects of the slight change, will have a huge impact on China's refrigerator exports.
The strategy of Chinese refrigerator companies in overseas markets still needs to be adjusted in a timely manner with the optimization of product structure as the core.
The retail growth rate is still in storage, and the sinking channel still needs to be activatedThe data at the retail terminal still looks good. According to the total data pushed by Aowei Cloud Network (**c), in January 2023, the retail sales of China's refrigerator market will be 92 billion yuan, a year-on-year increase of 60%, and retail sales are expected to grow by 10% year-on-year in the fourth quarter. But this set of data, especially in the fourth quarter, needs to be remembered by the industry, as the market was almost shut down in the same period last year.
The retail situation of refrigerators after wringing out moisture is not consistent in different channels. In the past three years of the new crown epidemic, the fragmentation of sales channels of ice washing products has become more and more obvious, in addition to chains, platform e-commerce, professional e-commerce and supermarkets, emerging e-commerce such as Douyin, Pinduoduo, and Xiaohongshu have risen rapidly, in addition to emerging formats including community stores.
Among these channels, the retail sales of emerging channels such as Douyin have shown explosive growth along with the hot sales of low-priced products, diluting the proportion of other channels, especially in the third- and fourth-tier markets, that is, offline dealers in sinking channels.
According to rough statistics from various surveys, the year-on-year growth rate of retail sales in sinking channels in 2023 will be less than 1%, and it is precisely this part of the channel that carries a huge amount of "trade-in" space. The "household appliances going to the countryside", which ended in the last year of the dragon, should have been the core battlefield for eliminating old refrigerators, but how to stimulate the motivation to replace the sinking channels, it is obvious that the princes from all walks of life have not found the best answer, and they have not formed a joint force.
Low-priced products that only rely on breaking through the bottom line will inevitably become the cannon fodder of the copycat war in the sinking channel.
Start planning for my 2024Capacity expansion, profit pressure
The growth rate of production and sales data has given the refrigerator industry sufficient confidence to expand production capacity for two consecutive years. On December 10, the high-end smart refrigerator production line with an annual production capacity of 2 million units was officially put into operation in the Haier Kaos Industrial Internet Ecological Park. A month earlier, the first phase of Omar Refrigerator Intelligent Manufacturing Base was officially put into operation, expanding the production capacity of Omar refrigerators to 18 million units. Counting the Gree Luoyang base, Midea's Jingzhou base and Panasonic's Wuxi base, which will be put into operation in 2022, the total production capacity of China's refrigerator industry has expanded by more than 15 million units in the past two years.
According to rough statistics, by the end of 2023, the total production capacity of household refrigerators in China has exceeded 1500 million units. In 2022, the capacity utilization rate of the refrigerator industry hit a record low, and the capacity utilization rate in 2023 will only remain at the level of less than 60%.
Combined with the background that most of the new production capacity is high-end smart products, the industry has reason to believe that there is still a large number of redundant production capacity of low-end products in the current refrigerator industry.
Therefore, the strategy of breaking down the floor price to push sales is not only the battle for exports and the sinking market, but also the problem of capacity redundancy. At a time when consumption grading is becoming more and more obvious, how should low-end redundant production capacity be released?
In fact, the three noteworthy phenomena of strong comprehensive export power, the rapid rise of emerging e-commerce, and low-end capacity redundancy can be judged that behind the boom in production and sales of the refrigerator industry in 2023, there is a risk of lower profits. In 2024, there is no expectation that the fundamentals of the refrigerator market demand will be significantly positive, and refrigerator companies have no reason to be blindly optimistic.
Dai Huizhong, chairman of Hisense Home Appliance Group, said: "We must adhere to an ingenuity, maintain an original intention, uphold a sincerity, show value in constantly exceeding the expectations of users of the times, and create a better future in the same frequency resonance with the mission of the times." ”
This sentence should be encouraged by the whole industry.