China’s home appliance makers to profit from replacement cycle
Analysts say the appliance sector can keep expanding even in a weak property market, as most new products sold will replace used ones
For Chinese home appliance companies, future growth depends on whether their new products can excite consumers enough so they want to throw away their old fridges and washers.
Despite the slowdown in new home sales – a key driver of new appliance shipments – the profit outlook remains robust for the country’s top white goods makers as they boost investment in smart functions and product design, as well as social media marketing, to attract affluent consumers, according to industry experts.
Sales of home appliances have seen weak or negative growth in the past few years and confidence in the sector has been further dampened by signs that China’s property market is cooling.
In November, property sales growth slowed to 7.9 per cent from the 26.4 per cent year on year growth rate recorded in the previous month – the slowest pace in a year. The tier-one cities of Beijing, Shanghai and Guangzhou even showed a year on year decline of 8.5 per cent in November, according to a report by HSBC.
“It is generally believed that property transactions lead white goods demand by six months,” said HSBC analyst Lina Yan. “The market is concerned about the potential negative impact on appliance demand from the slowdown in the property market, especially from the second half of 2017.”
