Changes Of Foreign Household Appliances In China

On the morning of September 22, Tang Shanda, who had just attended the opening ceremony of Bosi Nanjing R & D center, rushed to the next stop again. In May last year, Tang Shanda was officially appointed president of the Greater China region of Bosi household appliances group, fully responsible for the business development of the company.

Before that, Tang Shanda had worked for P & G for 19 years, and worked and lived in China for 9 years, which can be said to be a half "China expert". The deep insight into the Chinese market environment and consumers is one of the important reasons why he joined Bosch.

"The needs of Chinese consumers are constantly changing. Their demands and the pursuit of high quality and fashion design are in the forefront of the world. At the same time, they are also leading the trend of the whole household appliance market." Tang Shanda told reporters of the 21st century economic report that Boshi will continue to focus on the high-end home appliance market in the future, "because this just fits in with the development trend of China's consumption upgrading".

In recent years, many foreign appliance brands have withdrawn from the market. Hitachi, LG, Sanyo, Siemens, Panasonic, Toshiba and other groups have successively divested some or even all of their home appliance businesses. This year, under the influence of the epidemic, whirlpool and Philips have also disclosed that they are going to sell China's home appliance business. If there is no accident, Chinese household appliance enterprises will become "takers".

Bosi is one of the few foreign-funded household appliance groups that still maintain steady expansion in this rolling tide. It is understood that the newly launched Nanjing R & D center is the largest comprehensive R & D center of Bosch in the world, and also an important part of the group's R & D strategy. It will undertake the R & D and innovation of core products and the exploration of cutting-edge technologies.

Bosi is one of the few foreign-funded home appliance groups that still maintain steady expansion. Chinese vision

Advance and retreat

Since entering China in 1994, Bosch has gradually expanded its investment distribution in China. It has established five subsidiaries, three production bases in Chuzhou, Wuxi and Nanjing, as well as a global R & D center and Asia Pacific Data Exchange Center.

In September 2014, Bosch reached an agreement with Siemens to sell its 50% stake in Bosch appliances to Bosch Group for 3 billion euros. Since then, Bosch has officially become a wholly-owned subsidiary of Bosch group. At the same time, Bosch China also began to operate with a new organizational structure. For the first time, the mainland of China, Hong Kong, Macao and Taiwan of China were included in the administrative management, and the Greater China region of Bosi appliances was established.

At present, the Greater China headquarters of BSI is located in Nanjing. The reporter noted that since 2015, China has overtaken Germany as the world's largest single country home appliance market. The newly opened R & D center covers an area of 22000 square meters, with a total construction area of 47000 square meters and a total investment of about 400 million yuan. It is estimated that the R & D center will accommodate about 1000 R & D personnel by 2025.

In an interview with 21st century economic report, Schubert, senior vice president and chief operating officer of Bosch home appliance group in Greater China, said that the main functions of the new R & D center are divided into three parts: one is to provide an office environment full of creativity and inspiration for employees, especially the R & D personnel; the second is to sit on the most advanced laboratory equipment of Bosch in the world; the third is to serve as its global leader The largest R & D center focuses on all product categories and develops the most cutting-edge technology.

"On the one hand, Bosch will increase R & D investment and employ R & D personnel to further strengthen R & D capability. On the other hand, the R & D center is an innovation engine, which can develop more high-end innovative products. In addition to traditional categories such as refrigerators and washing machines, it will carry out research and innovation in some emerging product categories, including dishwasher, dryer, and oven. " Schubert also mentioned that the R & D center has a whole floor dedicated to developing software, covering interconnection, smart home and other products.

At present, Bosch is fully implementing the digital strategy and striving to transform to "hardware +". After joining, Tang Shanda will strengthen the brand building of Bosch, Siemens and jagner, and continue to cultivate the Chinese market. He told reporters that Boshi is still very optimistic about the future development of the Chinese market.

However, not all foreign appliance enterprises think so.

In August this year, Galanz plans to offer to buy up to 61% of the shares of whirlpool (600983. SH) at a price of up to 2.4 billion yuan. The news immediately triggered an uproar in the market. The acquisition will be successful. For whirlpool of the United States, it means withdrawing from the Chinese market.

In September, it was announced that China household appliance group would bid for Philips (NYSE: PHG) domestic appliance business. Jiuyang, Haier, Midea and Gree were all bidders. This is another old European household appliance enterprise planning to give up its home appliance business after Siemens withdrew from the home appliance market. In the past decade, Philips has abandoned the independent operation of several consumer electronic businesses, such as mobile phones, color TV sets and audio systems.

Liu buchen, a senior observer of the home appliance industry, believes that since this year, there have been obvious differences in the value judgment of foreign home appliance brands on the future market. On the one hand, whirlpool and Philips both want to sell domestic appliance business, on the other hand, Bosch has increased its investment in China. In his view, China is still the world's most valuable market for investment. "In the next few years, there will be no substitute for China's position as the world's largest home appliance manufacturer and consumer."

But at the same time, Liu buchen believes that the withdrawal of some foreign brands from the home appliance industry does not mean that all foreign brands have lost their competitiveness. "In fact, many foreign brands still have advantages in products and technology, and Chinese enterprises should have a clear understanding of this." He said.

New challenges

In fact, every foreign brand that withdraws from China's home appliance market has its own and external reasons. For example, Hitachi, Sanyo and Siemens give up the operation of household appliances. It is more because of the strategic adjustment of the group that they hope to focus on areas that can produce more value.

Liu buchen pointed out that most of the international household appliance giants withdraw from the field of home appliances with a strong color of active exit. They do not withdraw passively, but turn to areas they think are more promising and competitive. With the cost advantage brought by the low labor force and land rent in the early stage, China's home appliance industry rapidly completed the capital accumulation and established a strong industrial cluster. The global home appliance manufacturing centers began to gradually transfer from Europe, America, Japan and South Korea to China, Southeast Asia, South America and other countries and regions.

It is understood that in order to overcome the problem of labor cost increase in recent years, Bosch mainly starts from the aspect of intelligent manufacturing, and also improves the added value by innovating products to offset the pressure brought by the increase of labor cost. China's home appliance companies are also trying to find a second track. Haier and Hisense enter medical, Midea acquires KUKA, and Gree vigorously develops the industrial sector.

At present, China has become the world's largest producer and trading country of household appliances. According to the data of the national home appliance industry information center, in 2019, the retail sales of China's home appliance industry in the online market and offline market will reach 310.8 billion yuan and 492.4 billion yuan respectively. In the same year, China's export volume of household appliances reached a record high, with a cumulative export volume of US $70.92 billion and a cumulative import volume of US $4.62 billion, with a cumulative surplus of US $66.3 billion.

But not every family can share this attractive cake. In the fierce market competition, not only foreign capital, but also local electric power enterprises have experienced reshuffle. Taking Panasonic as an example, relevant data show that the market share of Panasonic in China's home appliance industry has dropped from 20% in its heyday to 2% in 2019, and now it has fallen out of the first echelon of the electrical appliance industry. And whirlpool, which is in and out of the United States, has not been able to capture the Chinese market for more than ten years, and still only has a firm foothold.

Under the influence of this year's epidemic situation, the household electrical appliance industry can be described as worse. In the first half of this year, Whirlpool's business declined by nearly 20% with a loss of 115 million yuan, and the net profit attributable to shareholders of listed companies decreased by 93.35%. Philips, which plans to sell China's home appliance business, also had a hard time. In the first quarter, which suffered the most, Philips's net profit fell sharply to 39 million euro from 162 million euro in the same period of last year; the profit from continuing operation business also dropped to 42 million euro from 171 million euro in the same period of last year; the sales volume dropped to 4.15 billion euro, a year-on-year decrease of 2%.

"Affected by the epidemic situation, the demand of China's home appliance market has slightly declined, but the overall household appliance market actually has an annual growth rate of about 5% - 7%. Especially in the high-end and slightly lower home appliance market, there is actually double-digit growth. " According to Tang Shanda's analysis, the growth momentum of these two areas mainly comes from consumption upgrading and China's urbanization development.

After investigating and analyzing China's home appliance market in recent years, Tang Shanda found that there are three major changes: first, Chinese consumers have more demand for better quality products; second, the younger generation like to pursue products with design sense; third, the demand for intelligent and interconnected household appliances is increasing.

According to its disclosure, Tencent and Baidu will further develop and utilize the existing products, such as Baidu, Tencent, etc. "In this way, we can better provide a full range of digital solutions for Chinese consumers." He said.

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