Although the appliance industry as a whole experienced cost pressures for raw material prices to rise substantially last year, leading companies such as Haier Electronics and Little Swan achieved high-speed growth through high-end, smart, and internationalization strategies.
Haier Electronics (01169.HK) released its rosy 2017 results on the evening of March 21. Last year, its net income and net profit all increased by more than 20%. Its micro-sales platform had revenue of 4.5 billion yuan.
In 2017, Haier’s operating revenue was approximately 78.8 billion yuan, an increase of 23.4% year-on-year; profit attributable to shareholders of listed companies (net profit) was 3.36 billion yuan, a year-on-year increase of 20.6%.
Haier’s revenue from its washing machines, water heaters, channel services business and logistics business improved last year. The washing machine business revenue was 19.55 billion yuan, a year-on-year increase of 22.8%; the water heater business revenue was 6.44 billion yuan, a year-on-year increase of 20.1%; and the channel service business revenue was 63.7 billion. Yuan, a year-on-year increase of 23.7%; logistics business revenue of 9 billion yuan, a year-on-year increase of 19%.
Haier’s internationalization strategy also achieved similar gains. Last year, washing machine exports increased by 28.9% year-on-year, especially in Australia, and the Asian market grew rapidly. In the Australian market, Haier took advantage of the acquired Fisher & Paykel’s channel network to enter high-end channels and put in high prices. Differentiated products; in the South Asian market, we will vigorously develop the e-commerce network to promote the Haier brand.
From the perspective of channel structure, not only Haier’s offline distribution channel revenue increased by more than 20%, Haier’s online distribution channel revenue increased by more than 60%. Online channel sales through Jingdong, Tmall, ehaier and Shungou channels The proportions are about 46%, 37% and 15%, respectively.
Under the line, Haier has created a light asset store type with 'miniaturization of storefronts and intelligent sampling', and added smart cloud stores in Shangchao and community service stations. More than 1400 smart cloud stores were built online in 2017. The target is 2018. More than 20,000 new additions.
In the future, Haier plans to promote more than 30,000 Haier stores, 800,000 micro-stores, and more than 1,400 cloud stores, integrating the “three stores,” and vigorously develop the ecological revenue of the platform. Haier said that Tmall and Jingdong replaced Gome. Suning has become a new high-growth channel. To avoid online channels hitting offline channels, we use the same price both online and offline to develop a platform to support offline dealers.
The platform has now become an important contact network for Haier's interaction with consumers. In 2017, the company focused on 800,000 micro shop owners, and the transaction volume increased by 109%.
In 2017, the household appliance industry experienced cost pressures caused by substantial increases in raw material prices, but consumption upgrades led to the sales of mid-to-high-end and emerging products. China Unicom's online and offline total data show that the overall scale of China's home appliance market grew by 9 %, Of which, the market size of washing machines increased by 11.4%, and the market size of water heaters increased by 9.7%. The market growth of air conditioners, water purification equipment and air purification equipment all reached about 30%. The market share of major home appliance categories was further concentrated with high-quality brands.
Midea Holdings (000418.SZ), the leading washing machine company controlled by Midea Group, showed this trend last year.
According to the annual report of the Little Swan released on March 13th, its operating income last year was 21.38 billion yuan, an increase of 30.9% year-on-year; net profit attributable to shareholders of listed companies was 1.5 billion yuan, a year-on-year increase of 28.2%.
In the past two years, the prices of cold-rolled steel sheets, hot-dip galvanized sheets, copper and plastics-based raw materials have been in a dynamic trend, with raw materials and components accounting for more than 90% of the manufacturing cost of washing machines and water heaters. Haier Electric stated that if the future Raw material prices continue to rise, which may exert pressure on the gross margin of the manufacturing industry. They will respond to this by optimizing the product mix. Little Swan also stated that as labor costs continue to rise, raw material prices will continue to rise this year, and cost pressures will increase. Therefore, in 2018, we will adhere to the strategy of 'product leadership, efficiency-driven, and global operation' and pursue quality growth.