Analysis of Home Appliance Parts Forced to Change to Force Home Appliance Enterprises to Make Innovations

The other side of the “parts-for-profit” phenomenon is that in the context of rising costs, the upstream accessories industry has also felt the chill of the market. In 2012, when the household appliance market is not yet clear, the upstream channels for home appliance accessories have begun to stir, seeking to increase in new areas and reduce the pain of rising costs. Everyone recognizes that waiting for prosperity and waiting for the introduction of a new national incentive policy will only be passive.

Rising costs and double net revenue growth

In the cold year of 2011, white electricity companies generally suffered from the impact of slowdown in marketing growth. Many leading home appliance groups such as Midea and Haier's revenue growth slowed to the number of units compared to the double-digit growth rate in 2010. From the entire appliance industry chain, this impact is mutual. According to the analysis of the latest annual report, the increase in the operating cost of upstream components of home appliances is one of the direct causes of the slowdown in revenue. The withdrawal of the national stimulus policy and the high inventory of the air conditioning industry also affect the shipment of the compressor and even the entire upstream. Channel chain.

All these turbulences have sidelined the upstream parts companies represented by Sanhua Group, Huayi Compression and Highly Group, and they have stepped up their efforts to open up new marketing channels in new areas and seek new growth points.

The latest 2011 Home Appliances annual report shows that in the past year, the listed home appliance upstream accessory companies still achieved double growth in operating income and net profit under the overall unsatisfactory industry situation. Sanhua’s business growth rate was the most significant year-on-year. Huayi Compression dominates the accessories industry with a huge increase of over 60% in net profit. However, although the simultaneous increase in net revenue from revenues intuitively reflects their achievements in the past year, this does not mean that upstream parts companies have not been affected by the harsh environment of the industrial chain in 2011. From the analysis of the report, the representative accessory companies have a negative growth in the single-item interest rate of the relevant main business in the single-product gross margin. For example, the operating income of Sanhua air-conditioning components has reached 3.669 billion yuan last year, a year-on-year increase of 28.33%, and the gross profit rate has reached 25.95%. Contrast with this is refrigerator components, revenue is only 106 million yuan, a year-on-year decrease of 5.82%. Although Huayi Compression Co., Ltd. achieved an increase of 5.48% compared to previous years in the revenue of its accessories, the main business compressor sector suffered a slight decline due to the influence of the external environment. The same holds true for Haili shares.

Analysis of the reasons is not difficult to come out, as the upstream of the industrial chain, the survival pressure is also part of the downstream manufacturers and end markets. It is reported that high expectations and optimistic judgments have led home appliance companies to begin capacity expansion at the beginning of this year, but a series of tightening macroeconomic policies are like pouring cold water into the hot-rising industries. While the policy effect of home appliances to the countryside has weakened, the home appliance market has begun to cool down. After the company changed its previous high-expectancy judgment, it was generally not optimistic about the market outlook. Enterprises that had dared to do inventory now became cautious, looking ahead and could not afford high inventory risk. In addition, the cooling of the terminal also makes home appliances manufacturing companies poorly funded. This pressure on the industry chain will undoubtedly make upstream parts companies feel “chilly.” The most direct impact is that the orders from home appliance manufacturing companies have decreased. Even if the orders do not change, the requirements for these parts companies have also increased.

With all sorts of factors intertwined, it is not surprising that there has been a rise in revenue growth among upstream component companies in the past year. Whether it is Sanhua, Huayi Compression, and Highly Stock, the cost increase rate has exceeded 20% in one year, that is, the cost of at least RMB800 million has also risen. This figure has been truly astonishing.

Change under pressure and change, increase new areas of force

Sanhua Co., Ltd. has begun to step out of a single upstream component manufacturing sector. The infiltration of downstream companies, including the development of new fields including solar energy and commercial air-conditioning, illustrates the direction of the company's future development, and increases the number of electronic expansion valves, solenoid valves, etc. The value of product sales, and the use of one for two, one for many and heat pump water heater for the new direction of development force, in the product structure optimization and strive to achieve 300 million in three to five years of sales. At the same time, in order to shift the pressure on the downstream channels of domestic production, Sanhua not only set up four new factories nationwide, but also accelerated the pace of overseas mergers and acquisitions.

Huayi Compression said that due to the sharp rise in the prices of major raw materials such as copper and steel, the increase in product costs has caused the gross profit margin of products to decline. In addition, the sales revenue of compressor products increased by 14.66% over the same period of last year, which was mainly due to the substantial increase in export revenue. Facing the severe situation in which the growth of the domestic market is declining, Huayi Compression has stepped up its efforts to open up overseas markets and continuously expand new regions and customers for overseas sales. In addition to traditional export regions such as Europe and the Middle East, Huayi compressed exports in 2011. Expanded to Brazil, Chile, Lithuania and other countries and regions, added LG, Whirlpool and other customers, a total of 7.06 million units of compressors were exported, an increase of 40.36% year-on-year, and export business revenue increased by 39.28% year-on-year.

Haili, on February 28 this year, Shanghai Highly’s first new energy automotive air-conditioning compressor assembly line was put into production. The project, which lasted 8 years and invested 150 million yuan, enabled Haili to step out of its familiar home air conditioning compressor sector. Start the diversification process. In the annual report, it also clearly stated that in addition to automotive air-conditioning compressors, companies have made new advancements in compressors for heat pump water heaters, inverter compressors for clothes dryers, and wind power photovoltaic new energy compressors.

At the beginning of May, Highly did not hesitate to “get out of the way” to get involved in the field of electric vehicles and to participate in the 2012 World Electric Vehicle Conference held in Los Angeles, USA, with its new energy vehicle electric scroll compressor. Its new electric compressor for vehicles integrates advanced technologies in the three major fields of scroll fluid compression machinery, permanent magnet synchronous motors, and space vector variable-frequency drive control, which also indicates that Haili is not aiming for new areas.

Despite the joys and worries in the annual report, the pain of cost upgrades and the slowdown in revenue growth have followed suit. However, this has also opened up a window for the upstream accessories companies. The leading accessories companies such as Sanhua, Highly and Huayi Compression have already As an example of the industry, we have made transitions and changes. We have begun to invest more in energy conservation, environmental protection, high-efficiency, high-value-added fields, and have also cast a long-term vision on overseas markets.

As the insiders of the home appliance industry say, pressure on the industrial chain will be transmitted upward as soon as possible, which may not be a bad thing for these upstream accessory companies. The accessory companies may seek new competitiveness while seeking new competitiveness through innovative reforms such as new materials and new processes. Can open up new customers in other fields.

Core Accessories Become Home Appliance Industry Competition Focus

At present, the supply and demand situation on the home appliance industry chain has formed a sound and orderly virtuous cycle - distribution agents purchase small home appliances, small home appliance manufacturers purchase home appliance accessories, and home appliance accessories companies purchase raw materials. According to HC Electronics experts, there are mainly three factors that affect the decision of the home appliance accessories purchaser to establish a cooperative relationship with an accessory manufacturer: The first is the quality of the product. The quality of some core accessories products determines the merits of the overall performance of home appliances, and the merits of the overall performance of the small household appliances brand and market share play a decisive role; the second is the price of the product. With the continuous rise of raw materials, venues, and labor costs, the profits of small household appliances with the name of “gold mines” have shrunk severely. The demand for prices in the procurement of spare parts has naturally become more demanding, and whoever is more cost-effective will win. The third is the delivery cycle. If the upstream parts companies often postpone the delivery or the delivery period is too long, it will bring a lot of unfavorable influence to the downstream finished product manufacturing companies and will naturally affect the customer's cooperation loyalty.

In fact, under the severe situation, home appliance companies and accessories companies have penetrated each other in the industry chain. Such as the United States and Gree and other large home appliance companies in order to reduce costs, improve competitiveness, has long begun to produce some home appliances core accessories. With the improvement of people's health and safety awareness and the expansion of competitive pressures in the home appliance market, competition among enterprises is no longer limited to the expansion of home appliances and channels, but has begun to integrate the entire industry chain including upstream core components and accessories. Deep conversion.

An interesting example is the Chunlan air conditioner that has tasted the sweetness in the compressor field. Liu Yafu, vice president of Chunlan Group, said: "Selling a compressor is better than selling air-conditioners."

Chunlan Group, a Jiangsu company that had won the "king of China's air conditioners" in 1995, is now planning a comprehensive revival. Liu Yafu recently revealed that Chunlan air-conditioning sales target for this year is planned to be 3 million units, return to the mainstream market camp before 2015, the market share of more than 15%, which means Chunlan want to use 3 years to re-enter the air-conditioned first-line brand Ranks. In his view, the future growth of the air-conditioning industry is mainly in the three or four-tier market, so Chunlan has given up the big city agency system, changed to county-level agency, and plans to increase the number of county-level agents to 2,000 this year, eventually increasing the number of township outlets to 10,000. One.

Waiting for the opportunity: The market tests the patience of the enterprise

“The East is not bright in the West,” and many people in the industry judged that “rigid demand is always there, and persistence will be rewarded”.

The Japan Motor Industry Association (JEMA), which covers 62 countries, including Japan, counted the market demand for 7 types of white goods from 2004 to 2010, and recently announced a report on the actual market demand.

The report shows that demand for seven kinds of products including air conditioners, refrigerators, washing machines, dust collectors, electric stoves, and electric razors has risen. In all seven commodities, the overall market demand in 2010 was higher than that in 2004.

There are differences in the market growth of different commodities, among which the growth of air conditioners and dust collectors is the most obvious. The average growth rate during the six years from 2004 to 2010 was 6.5%. In addition to the world’s largest market, China, the market demand of emerging developing countries such as India and Brazil was also very clear. The market demand in 2010 was increased compared with the previous year. 16.4%, a total increase of 69.85 million units. In terms of dust removal machines, North American and Western European countries performed well. The average growth rate from 2004 to 2010 was 5.2%.

The market demand in 2010 was 11.5% higher than the previous year, totaling 97.46 million units. In the largest market demand country, the United States, an increase of 15.7% over the previous year, the first double-digit growth, set a historical record.

In addition, emerging developing countries such as China and Brazil have also demonstrated strong market momentum. In the comparison of the rankings of the countries' markets, China and the United States share equal shares in the number of sales of the above seven kinds of products. Japan also performed well in products such as air conditioners, rice cookers, and electric razors. It ranked second in 2010.

In terms of geographical comparison, market demand for BRICS countries such as China, India, Brazil, and Russia has grown significantly compared with market saturation in Japan and North America and Europe.

The demand growth was particularly significant for air conditioners (up 54%) and rice cookers (up 56%), which accounted for more than half of world market share.

In addition, the average growth rate from the product point of view for six years is respectively air-conditioning (10.9%), dust collector (6.5%), electronic stove (6%), refrigerator (4.9%), rice cooker (4.4%), washing machine (4.3% ), electric razor (2.7%), indicating that the home appliance accessories market will usher in a new round of peak demand.