Impact of Export Decline, Chinese Home Appliance Market Shipments Declined

According to iSuppli Corporation, exports of major home appliances in China are expected to decrease by 2.7% in 2009 due to the decline in exports caused by the global economic recession. The total shipments of major home appliances in China in 2009 are expected to be 177.5 million units, which is less than 182.4 million units in 2008. The combined shipment volume represents the market trend of major home appliances such as air conditioners, washing machines, refrigerators and microwave ovens.

Exports will decline 8.5% from 2008, from 108.3 million units to 99.1 million units.

As the government introduced subsidy measures, the Chinese domestic market will continue to grow despite the global economic slowdown. The Ministry of Finance of China has expanded a stimulus plan to reduce the price of rural consumers buying home appliances by up to 13%. This measure has enabled the domestic market to maintain a fairly rapid pace of growth, although not as strong as in previous years.

China's large domestic equipment manufacturers control the main household appliance market. These companies are pursuing product differentiation strategies in the domestic market, and they are cost-conscious in the export market. Designing major appliances with new features that can appeal to consumers is a major challenge for manufacturers.

These companies are adopting vertical integration strategies to control key components and equipment and help reduce production costs. Many companies have begun to outsource low-end products to contract manufacturers. In order to increase equipment utilization, major home appliance suppliers are reluctant to expand production capacity.

Due to the general lack of innovative and diversified products in the non-inverter air-conditioning market, China's major air-conditioning companies are developing products using frequency conversion technology.