High-end Fridges Become Hot Potatoes in China

China’s high-end fridge industry is undergoing the fiercest ever competition. The Chinese domestic manufacturers, as well as the leading international giants, all long for a big share in this market.

According to the official data, the total number of fridges produced in China reached 10.20 million units in the first two months of 2010, increasing by 62.44% year on year. The total number of fridges sold in China reached 10.55 million units in the same period, up 70.93% year on year. The inventory of fridges also decreased by 55.47% to 840,000 units. Another group of data showed that the sales of single-door, double-door, three-door, multi-door fridges and French-door fridge all saw a year-on-year increase in January and February. Among them, the sales of three-door and French-door fridges all increased by 100%.

Promising Fridge Market

Looking back at the beginning of 2009, we can see that China’s fridge industry went through a tough period due to the financial crisis. The production decreased by 25% in January 2009 compared with a year before. This January the output of fridges in China went up by 62.44%, while the inventory decreased by 50%. Different fridge manufacturers actively deploy new marketing strategy and the market takes on a promising development trend.

From 2009 to now, the fridge industry greatly benefited from China’s government’s policy of increasing domestic demand. According to the official data, the distributors have already sold 37.67 million units of home appliances to the rural consumers by the end of 2009, of which 15.61 million fridges have been sold – the largest number among all kinds of home appliances. In the first quarter of this year, the project of “home appliances going to the countryside” saw the sales amount of 31.67 billion yuan (USD 4.64 billion), 6.9 times larger than the one of the first quarter, 2009. The sales amount of fridges reached 9 billion yuan (USD 1.32 billion), second to the one of color TV sets.

On May 1, 2009, the amended “Power Consumption Value and Energy Efficiency Level for Home-based Fridges” was officially carried out. The new standard increased the energy efficiency level for home-based double-door fridges by 20%. On June 1, the new energy efficiency mark for the fridges will be put into use. These measures will further promote the technological upgrade in energy saving.

As we see in the big home appliance chain stores like Gome and Suning, some fridge manufacturers have already begun to produce fridges according to the new rules. Some of the new fridges have already seen the new energy efficiency mark on its facade.

Chen Gang, deputy secretary-general of China Household Electrical Appliances Association, the new standard is playing a positive role in increasing the enterprises’ abilities of production, research and development.

High-end Products Flood

In the recent years, the high-end fridges began to seize the most eye-catching position in different home appliances stores and the sales also saw a drastic increase. This February the 3-door fridges saw a 153.2% year-on-year increase and the sale of multi-door fridge saw a 131.25% increase compared with last February. In addition, the sale of French-door fridge in February increased by 142.05% from last year.

From the second half of 2009, the major fridge manufacturers in China began to launch their knock-out high-end fridges. The

brands and types of high-end fridges both went through continuous increase. The domestic enterprises put more and more energy into the research and development of the high-end fridges, aiming at competing with the foreign enterprises for the rights of saying.

On March 26, Haier launched its new Casarte fridges, stating the development trends of high-end fridges in the future – big volume, multi-door, drawer-style, intelligent and low-carbon. The Casarte French-door fridges, 6-door fridges and Italian-style 3-door fridges attracted the eyes of all the attendees of the product launch. The four featured Casarte French-door fridges showcased the flawless combination of the arts and the home appliances. Each Casarte fridge, as introduced, meets the Level One Standard of national energy efficiency. These fridges, with numerous new technologies adopted, can not only save 20% energy compared with the ordinary ones, but also stand out in configuration.

The Midea Group’s European-style fridges were sold very well at the beginning of May. The unique style, attractive L-shaped handle and the outstanding performance in keeping fresh explain the its popularity

The BCD-253UTM fridges, for example, have the latest cooling system applied, can realize the fast and accurate temperature change between -7℃ – 10℃ to keep each kind of food fresh. In addition, this kind of fridge also meets the Level One Standard of national energy efficiency.

Another domestic fridge manufacturer – Hisense – launched its Apollo-Capsule and Diana-Moon Goddess fridges integrating the 6A all-purpose qualities and 360° freshness keeping technology. These high-caliber fridges are featured with efficient energy saving, stable frequency conversion, fast temperature change and stylish appearance.

Xinfei Group set foot in the high-end fridge market in 2009 and made certain achievements. Its Tianzun serial fridges can be seen as a home decoration with outstanding cooling performance.

In addition, Samsung, LG and the other foreign enterprises also launched their high-end products in the Chinese market, aiming at bigger market shares. During the 3-day holiday in May, these enterprises tried every means to attract the customers.

Zhu Lijun, an analyst from Galaxy Securities, thought that the fridge manufacturers, excited by the amazing fridge market in 2009, made up their minds to accelerate their pace in driving into high-end fridge market. “Big volume”, “frequency conversion”, “energy saving” and “environment friendly” have become the key words of high-end fridge market in 2010.

Upgrade of Competition

Looking at the competition pattern of fridge market in China, Haier, Midea and Hisense undoubtedly take the dominant places. The foreign giants, however, never slow down their pace of catching up with these leaders. The project of “home appliances going to countryside” provides them with new opportunities to share the big and promising rural market. The less important domestic companies, like Xinfei, have gradually stepped into the high-end market with the hope of benefiting from the drastic increase there. In the future, the competition in China’s high-end fridge market will become more and more furious.

After Haier’s launching of Casarte fridges, it was laurelled with the “first brand of white home appliance in the world”. According to the data, Haier was ranked No.1 in global fridge market for two straight years with the market share of 10.4%. Last year, Haier went on the way of increasing production capacity. One of its manufacturing bases in Hefei, Anhui, saw its production capacity from 2 million units to 3.5 million units. In addition, Haier also built a new manufacturing base in Chongqing.

Also in 2009, Hisense began to the cooperation with the world-leading home appliance company Whirlpool in building the high-end fridge manufacturing base. Then, a series of high-end products came into the market. Zhou Xiaolong, president of Hisense, said: “We will be the champion in the high-end fridge market share in China in the next three to five years, and we will try to be the runner-up in the whole world.”

Midea, after the restructurings and integrations of its fridge department, came back from the cold. Fang Hongbo, CEO of Midea Cooling Group, a subsidiary company of Midea, said that Midea is trying to take the second place in the next three years.

Choi Goi-waen, standing director of Samsung Product Strategy & Management Department said: “Samsung is going to be the No.1 foreign company in China’s high-end fridge market this year.”

Furthermore, the popularity of fridges in the rural market in 2009 made the manufactures see the potential. More companies, including some foreign companies which previously stood firmly in the urban market, took part in the tenders to become a member of the project of “home appliances going to countryside”. Apart from Siemens and Samsung which already attended the tender last year, Whirlpool, Panasonic and so on also appeared in the list of tendering.