Upgrading, rural shoppers lift home appliance sector

China's home appliance sector saw steady growth in the first half of 2019, with total revenue reaching 429.7 billion yuan ($62.4 billion), fueled by consumption upgrades and explosive growth of online retail in small towns and rural areas, a report showed.

More than 40 percent of sales revenue came from e-commerce channels, 7.5 percentage points higher than that of same period last year, according to a report released by the China Center for Information Industry Development (CCID) under the Ministry of Industry and Information Technology.

Chinese consumers tend to buy high-quality, intelligent and personalized products such as floor-cleaning robots, vacuum cleaners, dishwashers and electric toothbrushes, the report said. Moreover, Chinese home appliance makers and online retailers are accelerating efforts to further tap the consumption potential from rural areas.

Chinese e-commerce giant JD topped the list in retail channels of home appliances, accounting for a 22.7 percent market share, followed by Suning.com (21.1 percent) and Alibaba's online marketplace Tmall (10.1 percent).

Although less than 20 percent of online retail sales came from villages and small towns during the January-June period, the revenue from e-commerce channels in these areas increased by 96 percent year-on-year, said An Hui, deputy chief engineer of the CCID.

In addition, the sales revenue of televisions, refrigerators and air conditioners stood at 63.1 billion yuan, 51.6 billion yuan and 118.9 billion yuan respectively in the first half of this year.

"The increase of per capita disposable income of residents in rural areas, and their consumption upgrades have led to the explosive growth of online retail in the countryside," An said.

He estimated the domestic home appliances sector will maintain steady growth in the second half of this year, and the tendency of consumption upgrades and expansion into small towns and rural areas will continue, owing to the country's series of policies to stimulate the consumption of home appliances.

According to JD, orders from fourth-tier cities and below surged 108 percent on June 1, when this year's June 18 shopping carnival kicked off. Sales in the home appliances category surpassed 1 billion yuan in just two minutes and 36 seconds.

"E-commerce platforms are seeking to unleash the consumption potential from fourth-tier cities and below this year, as the growth of online shopping in first－and second-tier cities is slowing down," said Cao Lei, director of China E-Commerce Research Center.

Cao added that people in smaller towns and rural areas are seeking high-end products, along with the rising e-commerce penetration rate in these areas.

"There is huge growth potential for home appliances in rural areas, especially the e-commerce channels, and the logistics and distribution in these areas are still developing," said Liang Zhenpeng, a consumer electronics analyst.

Liang added as the growth rate in domestic home appliance market is slowing down, major players should step up efforts to expand in overseas markets, such as Southeast Asia, South America and other emerging markets.