Home appliance makers to ride intelligence and Internet to glory

TCL LED televisions are for sale at a home appliances store in Qingdao city, East China's Shandong province, October 30, 2015. [Photo/IC]

By 2020, home appliances will generate annual sales of 2.2 trillion yuan ($339.3 billion) in China. Intelligent appliances will become increasingly popular, according to a report by China Market Monitor Co Ltd, a market researcher and information provider.

In the first half of this year, home appliance sales reached 769.7 billion yuan, up 4.3 percent year-on-year, according to CMMC.

Its report said in the context of home appliances, Chinese families' purchasing power will be greatly improved due to rise in incomes. The rural market will see rapid growth.

The "Internet Plus" strategy, championed by Premier Li Keqiang, is expected to hasten the integration of traditional home appliance manufacturing industry with Internet, big data, cloud computing and other new information technologies.

Intelligent white goods like refrigerators, air conditioners and washing machines will account for 45 percent of total white goods. Similarly, 25% of kitchen appliances like ventilators, gas stoves and juicers will be intelligent. Demand for intelligent appliances will reach 1.5 trillion yuan over the next five years, the report said.

Although still nascent, the intelligent appliance segment injects new vitality into traditional brands and challenges manufacturers, said Zuo Yanque, president of CMMC's brand center.

Wen Jianping, president of All View Cloud, a Beijing-based consultancy specializing in home appliances, told a forum in Beijing recently that Chinese home appliances accounted for 60 percent of the global output. A bunch of Chinese enterprises such as Haier Group, Midea Group and Gree Electric Appliances Inc with annual revenue of more than 100 billion yuan are emerging.

Home appliance sales growth will be between 5 percent and 8 percent in the next 10 years. Their output is expected to surpass 3 trillion yuan, said Wen.

"The next three to five years will be a key period when the competition among Chinese, Japanese and South Korean enterprises in the global home appliance market escalates. There is a trend that suggests China will enjoy an edge over others as it has a supporting industrial chain, the R&D capacity for core technology and the brands' comprehensive strength," Wen said.

It is estimated that China will overtake Japan and South Korea to become the leader in the global home appliances industry by 2020.

In the January-June period this year, sales volumes of color TV sets and washing machines increased by 3.4 percent and 1.7 percent year-on-year, respectively. Sales of refrigerators, however, dropped by 1.1 percent while air conditioners stayed flat, according to CMMC.

Sales of smoke suckers, water heaters and gas stoves rose by only 2.3 percent, 3.3 percent and 2.4 percent year-on-year, respectively. In contrast, sales of small household appliances like vacuum cleaners, humidifiers and garment steamers surged 20 percent or more.

"Domestic brands should seize the opportunity brought about by the Internet era, by connecting every segment, such as production, sales and promotions with the Internet," said Zuo.