After experiencing the market downturn and the dual pressure of the sharp rise in raw material prices, with the market recovering, the refrigerator market seems to usher in a turnaround with the support of continuous optimization of product structure. Although the sales trend is still unshaken, sales have been reported in success. At the 2018 China Refrigeration Industry Summit held recently, Wang Lei, deputy director of the China Household Electrical Appliances Association, said that in recent years, the refrigerator industry is still in a horizontal state as a whole, and industry competition has reached the final stage. So in this competition, the overall strength , “R&D capabilities, innovation capabilities, marketing capabilities, and supply chain integration capabilities are indispensable ones”. What are the advantages of those small and medium-sized refrigerator companies that have been squeezed by first-tier brands?
Raw materials rose harder and harder
Since 2017, the refrigerator market has become very polarized. The price of upstream raw materials such as black materials has risen step by step. Refrigerator mainstream companies rely on large-scale procurement capabilities and have dominant bargaining rights for upstream suppliers. They are generally presented on the basis of raising the average price. The steady increase in the amount of stabilizing, even with the opportunity of rising upstream raw materials, continuously squeezed the survival space of small and medium-sized enterprises. The data showed that the refrigerator market occupied the top four shares in the domestic market in 2017 were Haier (30.9%), the United States (12.5 %), Hisense Kelon (12.4%), Meiling (6.8%), CR4 increased 4.1 pct to 62.7% YoY in 2016. The raw material price increase cycle in 2017 actually favored the mainstream companies to carry out share consolidation, and the brand concentration in the refrigerator industry has increased. The higher you come.
On the other hand, raw material prices are pressing harder and harder, which makes small and medium-sized refrigerator companies start to struggle on the cost of life and death. From the relevant annual report or announcement data, one can snoop on the suffering of the market.
Oma Electric (002668) disclosed its 2017 annual report on the evening of April 19. The company achieved operating revenue of RMB 6.964 billion for the year, an increase of 38.14% year-on-year; net profit attributable to shareholders of listed companies was RMB 381 million, a year-on-year increase of 25.15%. Under the background of increasing profits, the sales volume of the refrigerator business was 8,988,700 units, a year-on-year increase of 20%; the revenue of 2,413 million yuan, a year-on-year increase of 32%. The data appeared to be brilliance, but the gross profit margin dropped by 8 percentage points. Profit also decreased by 6% compared with last year' but it exposed its impact caused by exchange rate fluctuations and raw material price increases.
The TCL Group's 2017 annual report does not specifically mention the specific sales volume and profitability of refrigerators. Only the company’s product mix has been continuously optimized, and the proportion of high-end products such as inverter air conditioners, air-cooled refrigerators, and non-polluting washing machines has steadily increased. The business data was ambiguous. However, it can be seen in the announcement of product sales and service business development in the fourth quarter of 2017 released in early January. In the home appliance industry, TCL’s sales of air conditioners and washing machines increased by 26.9% year-on-year, respectively. , 11.5%, but the refrigerator sales did not drop unexpectedly. The data in the table below can be clearly seen. In 2017, TCL Refrigerator sold 1.54 million units of refrigerators, a year-on-year decrease of 4.78%.
'The price of raw materials, the ability of the big brands to digest and absorb more' some, in the Chinese State Grid recently visited the survey, a small refrigerator company head told reporters, 'scale does not come up now has become our disadvantage.'
From the previous “Four Golden Flowers” to the current “1+4+N”, the speed of brand concentration in the refrigerator industry has continued to increase. The increase in raw materials has accelerated this process. The monitoring data under the Ovid Cloud Network line shows 2017 In the first quarter of the year, the market share of the refrigerator TOP5 brand was 72.6%. By the first quarter of 2018, the market share of the TOP5 brand had reached 77.6%. At this time, only 20% of the market space left for many small and medium-sized enterprises remained, and the giants’ competition became increasingly apparent. The trend will only accelerate the elimination of small and medium-sized brands.
Big brand channel sinks online losses while the third and fourth line market is squeezed
According to the total data from Ove Cloud's omnichannel promotion, the total retail sales of refrigerators in China was 33.76 million units in 2017, of which retail volume on the online market was 12.23 million units; in January-April 2018, China's refrigerator market retail volume was 9.2 million units, including The online market retail volume was 3.35 million units. From the data since 2017, the online market sales accounted for 36% of the overall market share, and remained high-speed growth in the domestic market as a whole as the refrigerator market remained stable. In the survey conducted by the Internet, it was found that the online market of most SMEs has been in a state of failure, and even some companies have reduced the input of online channels due to unsatisfactory online channels, discarding 36% of market space and continuing. The increasing market opportunities will devote all of its energy to the third- and fourth-line markets that have always been proud of and believe there are still advantages. But are the advantages really superior?
According to the monitoring data from Ove Cloud Network, from January to April of 2018, retail sales in the first- to third-tier markets in the country decreased by 2.1% year-on-year, and retail sales in the corresponding markets in Guangxi, Henan, Jiangxi, Ningxia, Shanxi, and Xinjiang increased respectively. 10.8%, 6.2%, 12.1%, 10.5%, 7.0%, 14.9%. In the case of a year-on-year increase of 5.8% in retail sales in the country's township market, Fujian, Guangxi, Guizhou, Hunan, Jiangxi, Inner Mongolia, Ningxia, Shandong, Shaanxi, The retail sales in the township market in Tianjin increased by 17.6%, 9.1%, 16.0%, 9.6%, 24.2%, 16.6%, 51.3%, 10.6%, 12.9% and 11.8% year-on-year, respectively. The information released by Jingdong Household Appliances also shows that they are sold from the market level. In terms of the situation, the proportion of sales in the fourth, fifth, and sixth-tier markets continued to rise, and sales maintained a relatively high growth rate year-on-year.
The above data shows that there is still great potential for development in the third and fourth-line markets, but this potential is not only seen by small and medium-sized enterprises that have entered the first round. With the rise of new retail, whether it is the pure electricity business represented by JD. Ali, Suning Gome, which has obvious advantages in the offline market, has accelerated its penetration into the offline market. E-commerce companies work together with traditional offline companies to explore new retail models. They also indicate that online and offline are moving toward deep integration and multi-channel marketing. It is gradually taking shape, and multi-channel marketing, compared with SMEs in the mid-to-low-end market, has high brand awareness and strong product reliability. What advantages do the mainstream refrigerator companies with online payment and offline experience say? Yu.
In addition to the layout of new retail enterprises such as Jingdong Ali Suning Gome, the mainstream refrigerator companies have also accelerated the layout of the third and fourth tier markets and have begun to establish specialty stores. 'Big brands focusing on the primary and secondary markets began to force the third and fourth tier markets. Our promotion capabilities and other aspects are not as strong as they used to be. When interviewed and researched, a small and medium-sized enterprise told the State Grid Corporation of China. The integration of online and offline channels has become a new trend. Big brands are cultivating the third and fourth line market. Will further squeeze the survival of small and medium-sized brands.
Difficulty in recruitment and double drain of talents
The external environment is in great danger, and internal hazards have never stopped. In the recent visits and investigations by the State Grid Corporation of China, most refrigerator companies, especially small and medium-sized refrigerators, generally reflected a problem - recruitment difficulties.
According to a survey conducted by the State Grid of China, recruitment difficulties are a major problem faced by the entire industry. But this is particularly evident in small and medium-sized enterprises. 'Recruitment is difficult, labor is difficult, people are hard to keep', 'temporary workers are looking for, "The long-term work is difficult to achieve," which is a reflection of the current situation of a small and medium-sized refrigerator company to reporters. While the market is increasingly diversified, young people's employment channels have also begun to diversify, which makes the company, especially the manufacturing industry, suffer from a high degree of hard work. And face great challenges.
According to the person in charge of the company, the company currently faces two major pressures: The first is the pressure of efficiency and quality. It is difficult to balance the quality and benefits of the current market situation; the second is the safety pressure, and the new employee has a large mobility due to the operation. Inexperts have hidden safety hazards. While safety accidents cause adverse social impacts, neither the employee's own family nor the company itself can explain.
Another SME reported that the lack of personnel directly led to a serious shortage of refrigerator capacity. 'The company's current production line is there, that is, no one, has always been short of hundreds of individuals, and there are two hundred people missing two production lines Empty ', the person in charge of the company even said that if the staff is satisfied, perhaps this year's total sales will rise by 20% -30%.'
In addition to recruitment difficulties, brain drain is also a major concern for these SMEs. Most of the SMEs interviewed in the survey said that the loss of a large number of R&D personnel and even the R&D team directly led to an extended R&D cycle of refrigerator products and further loss of market share. .
Under the pressure of industry reshuffle differentiation is difficult to break
After nearly 40 years of rapid development, China's refrigerator industry has gradually entered the 'second half', and the scale of production and sales will tend to be stable. China National Grid Editor-in-Chief Lu Shenghua believes that upgrading and structural upgrading have become the main theme of the industry's development.
Inside and outside the market, the almost stagnant refrigerator market has brought unprecedented pressure to SMEs. How to break the board has become a top priority, and the differentiation strategy has been quickly put on the agenda.
During the survey, China National Grid also saw some small and medium-sized refrigerator companies that have performed outstandingly on differentiated products: Dignity, with its peculiar characteristics, has received a certain degree of recognition in the market for stainless steel refrigerator products that require extremely high processing precision. Liu Shikun, deputy general manager of Electrical Appliances Group, has considerable confidence in its stainless steel products. He threatened to target more than 100,000 units this year. On the other hand, out of the optimistic view of the embedded refrigerator market, he also laid a dignity and continued to adhere to differentiated products. Route, focusing on embedded product strategy.
Jinghong Refrigerator has always adhered to the mid-to-high end line. It has made some breakthroughs in small and medium-sized refined refrigerator products. He Xuebin, general manager of Jinghong Electric, believes that as the aging of the population intensifies, retired employees have more leisure time and energy to go. The vegetable market or supermarket to buy fresh fruits and vegetables, no longer need to store too much food in the refrigerator, this time the small and medium-sized volume refrigerator will usher in a new market demand, so he said 'King Hong in addition to the preservation of technology and embedded smart home force , will also continue to invest in refined, small and medium-sized refrigerator product development.
However, the status quo is: In the face of a stagnant market, while small and medium-sized brands are making efforts, mainstream refrigerator companies have also launched their own differentiated products to seize the market. Such as Haier refrigerators, 'microcrystalline fresh' beautiful refrigerator , Meiling 'M fresh life series refrigerators', equipped with full ecological sterilization and preservation technology and full-time super silent technology Rongsheng refrigerators, Hisense boutique 'Scorpio series multi-door refrigerators', etc. In the refrigerator market demand is not strong, demand for segmentation accelerated Under the circumstances, big brands have the ability to build their own differentiated products, and at the same time they are more capable of optimizing and upgrading their products. In contrast, the so-called 'advantages' of SMEs are once again suppressed.
As Guo Weide, vice president of Aowei Cloud Network, said, in the context of continuous increase in overall costs and cross-border brands rushing to eat cakes, the scale advantages of mainstream refrigerator companies and the competitive advantages of high-end markets are prominent. The survival conditions of small and medium-sized brands are worrying and facing The danger of shuffling out.