Report by our reporter Yang Ranchen and Zhang Jiazhen from Shanghai

In the ten years since the "Belt and Road" initiative was put forward, more and more Chinese home appliances have used this new platform for international cooperation to reach all parts of the world.

According to the latest data released by the General Administration of Customs, in the first three quarters of this year, my country exported about 2.751 billion sets of various household appliances, and the export value was about 464.2 billion yuan, an increase of 7% and 8.2 respectively over the same period last year. Among them, the number of exports of electric fans, vacuum cleaners, televisions, air conditioners, refrigerators and other categories ranks in the forefront.

Since the joint construction of the "Belt and Road" initiative was put forward, major home appliance companies have also accelerated the pace of joint construction of the "Belt and Road. The relevant person in charge of Haier Zhijia Co., Ltd. (hereinafter referred to as "Haier Zhijia", 600690.SH) said in an interview with a reporter from China Business News that in the past ten years, Haier Zhijia has been in Asia and Europe such as Italy, Spain, and Pakistan. The overseas market continues to expand high-end brand channels and networks.

The relevant person in charge of Sichuan Changhong Electronics Holding Group Co., Ltd. (hereinafter referred to as "Changhong Holding Group") also said in an interview with reporters that since 1998, the company has begun to practice products "going out" as the goal and began Comprehensive development of the international market. "Up to now, the company has set up 18 operating companies in 17 countries and regions abroad, built overseas production bases in 5 countries, and established overseas R & D centers in 3 countries."

Share the opportunity of "the belt and road initiative"

Under the joint construction of the "Belt and Road" initiative, international cooperation has extended from the Eurasian continent to more than 150 countries and more than 30 international organizations in Africa and Latin America. This has also brought new development opportunities for my country's home appliances to sea.

According to data recently released by the General Administration of Customs, in the first three quarters of this year, my country's total import and export volume to countries that jointly built the "Belt and Road" reached about 14.32 trillion billion yuan, a year-on-year increase of 3.1 percent, accounting for 46.5 percent of my country's total foreign trade. In the first half of this year, my country's home appliance exports to countries that jointly built the "Belt and Road" have accounted for 38% of my country's total home appliance exports, setting a record high.

The reporter noticed that as one of the leading companies in my country's home appliance industry, Haier Zhijia has been making frequent efforts in the sea of home appliances in recent years. According to Haier Zhijia's semi-annual report in 2023, in the first half of this year, Haier Zhijia achieved overseas income of 66.917 billion billion yuan, an increase of 8.8 percent over the same period last year. "Revenue growth is mainly due to the firm high-end strategy, the listing of leading products to enhance the price index; in-depth development of the market network and deepening the joint construction of the 'Belt and Road' national industrial layout to seize development opportunities." Haier Zhijia said.

Specifically, in the first half of this year, Haier Zhijia has achieved good growth results in overseas markets. Among them, the European market achieved sales revenue of 13.278 billion billion yuan, an increase of 29.6 percent over the same period last year, while the South Asian market achieved revenue of 5.955 billion billion yuan, an increase of 23.5 percent over the same period last year.

Since the beginning of this year, Changhong Holding Group, another leading company in the home appliance industry, has also achieved good results in overseas markets. The relevant person in charge of Changhong Holding Group told reporters that from January to August this year, the company's international TV business moved forward steadily, with sales revenue increasing by 8% over the same period of last year and output increasing by 10% over the same period of last year. Sales revenue of international ice washing business increased by 82%, of which washing machine business expanded rapidly, with a year-on-year increase of 305%; air conditioning business revenue also showed a growth trend, with sales revenue increasing by 29%, capacity increased by 46% YoY.

In fact, in addition to the acceleration of traditional home appliances, new home appliances such as sweeping robots and floor washers are also actively expanding overseas markets. The reporter noticed that Stone Technology (688169.SH), one of the leading companies in the sweeping robot track, has sold its products in more than 100 countries and regions around the world, and has opened overseas companies in the United States, the Netherlands and Poland.

Relevant statistics show that in the second quarter of this year, the overseas regions of Stone Technology all increased by more than 40% year-on-year, and surpassed the US iRobot Company in the German-speaking region and some Asia-Pacific countries, ranking first in market share.

Dongguan Securities Research Report analysis that, with the recovery of consumption in Europe and the United States, overseas home appliance inventory accelerated de-stocking, the devaluation of the RMB is good for exports, China's home appliance exports are expected to continue to repair in the second half of the year. Orient Securities Research Report analysis that, in the short term, with the effectiveness of overseas destocking, home appliance exports will gradually transition to the replenishment cycle, superimposed on the low base effect, the next few quarters of export improvement trend to determine.

"In the long run, the home appliance export industry is undergoing significant changes. For example, with the improvement of comprehensive competitiveness, overseas markets have shown an obvious trend of'national entry and return'. The vigorous development of cross-border e-commerce is expected to continue to strengthen overseas. Increase in share and profitability." Oriental Securities Research said.

Global Resource Collaboration

While the joint construction of the "Belt and Road" initiative provides an opportunity for Chinese home appliances to go global, it is also further promoting the transformation and upgrading of home appliance companies and industrial chains.

The reporter noted that at present, home appliance companies have further realized industrial upgrading on the basis of purely exporting products to achieve resource coordination. Take Changhong Holding Group as an example. At present, the company has completed its layout in the Czech Republic, Pakistan, Spain and other countries to jointly build the "Belt and Road Initiative". The business has shifted from simple export and OEM production to the development trend of products, technology, talents, capital and brands, and "embarked on the journey of 'implementing global resource synergies".

According to the person in charge of Changhong Holding Group, the company has established manufacturing and trading companies in the Czech Republic, Indonesia, Pakistan, Spain and other Asian and European countries, and has established a research and development center in Spain. Haier Zhijia is also stepping up collaborative research and development overseas. The relevant person in charge of Haier Zhijia told reporters that the implementation of overseas high-end strategy requires global product collaborative research and development. In the Chinese market, localized R & D has basically met market demand, while overseas markets need to rely on the power of global brand creation.

"For example, a large drum washing machine in the United States cannot be designed with a single market alone, and needs to integrate China's product structure and hydraulic technology, Japan's functional design technology, New Zealand's drive system, and the U.S. control system. The product's development and launch has led to an increase in the market share and average price of washing machine products in the U.S. market." Haier Zhijia said the above-mentioned person in charge.

Due to the different needs of users in different countries, Haier Zhijia will rely on the "Trinity" strategy of localized R & D, manufacturing and marketing built by Chuangpai for many years to create high-end differentiated products based on the needs of local users. Haier Zhijia further said: "Taking the Middle East and East African markets as an example, Haier Zhijia has already laid out Haier, Candy and GEA high-end brands. In the future, Haier Zhijia will continue to deepen its layout and jointly provide users with smart life solutions based on the advantages of high-end brands."

In addition, in terms of sales model, Haier Zhijia will also realize the transformation from straight hair model to terminal model in the Middle East and East Africa markets. "The company will maintain a'zero distance' with local partners and consumers, and bring a manufacturing system that meets local characteristics to the local market." The relevant person in charge of Haier Zhijia further stated that the company will continue to invest in Egypt's local manufacturing base to set up refrigerators, freezers, washing machines, air conditioners, televisions and other factories, "not only covering the Egyptian market, but also radiating markets in Africa, the Middle East, and even Europe."

Accelerating Emerging Markets

Under the guidance of the "Belt and Road" initiative, emerging markets with huge potential such as Africa and Southeast Asia are becoming a hot spot for home appliance companies.

Take Haier Zhijia's development in Southeast Asia as an example. In the past three years, Haier Zhijia's revenue in Southeast Asia has increased from 3.6 billion yuan to 5.7 billion yuan, with a compound growth rate of more than 12%. However, the Southeast Asian market still accounts for a small proportion of Haier Zhijia's total revenue. According to Haier Zhijia's 2023 semi-annual report, in the first half of this year, the company's revenue in the Southeast Asian market only accounted for 2.36 of the total revenue, and the market potential needs to be further tapped.

To this end, Haier Zhijia has implemented high-end strategies in the Philippines, Thailand and other places, and the construction of high-end brand stores such as Casarte is gradually increasing. According to Haier Zhijia, at present, in Thailand's air conditioning and Vietnam's washing machine market, the company's market share has leapt to the first place, and Indonesia's ice washing share ranks among the top three. While showing a good development trend, the company is Accelerate the layout of high-end transformation strategy.

"Southeast Asia is now an emerging manufacturing base that is rapidly emerging." The relevant person in charge of Haier Zhijia told reporters that compared with the African market, the Southeast Asian market has a clear pattern, a younger population, and more consumption potential. "In terms of market demand, users in Southeast Asia have changed from product matching to the demand for upgrading, and the requirements for iterative upgrading of products are also higher."

The relevant person in charge of Changhong Holding Group also said in an interview with reporters that for the Southeast Asian market, including Indonesia, the company insists on adapting measures to local conditions, striving to launch products that are most suitable for the local market, strengthening its local presence, and striving to create A louder Changhong brand.

"considering the steady growth of the Indonesian market and the emergence of demand from neighboring countries, Changhong Indonesia Electric Co., Ltd. still has a lot of room for improvement in factory capacity and production efficiency, and will be further upgraded in the future according to the situation." The head of Changhong Holding Group said that, for example, the introduction of the company's mature application of "5G + Industrial Internet" intelligent manufacturing technology in China can effectively promote the development of Indonesia's manufacturing industry.

Changhong Holding Group further stated that from January to September this year, the company's overseas business as a whole showed a rapid growth trend, and the TV, ice washing, and air conditioning product lines all reached new highs. "In the future, the company will maintain a stable scale and continue to grow in core markets such as the Americas, the Asia-Pacific region, and Europe; make major breakthroughs in emerging markets such as the Middle East and Africa, and gradually form a global layout of Changhong's overseas home appliance industry."

Huatai Securities related research report analysis, home appliance leading enterprises through the external globalization of brand transformation, internal quality and efficiency, overseas layout and other ways to consolidate the advantages of the industrial chain, in order to cope with the rise and fall of overseas demand driven by the global economic cycle. In the short term, the competitive advantage of China's home appliance export industry chain has been strengthened, and the normalization of overseas inventories is also expected to stabilize exports. Considering the low export base in the second half of 2022, the growth of home appliance exports is expected to accelerate in the second half of this year.