China’s annual export growth rate of home appliances slows down

China's annual export growth rate of home appliances slows down

Although the foreign epidemic situation is still fluctuating in the second half of this year, home demand will inevitably decline from the first half of the year. According to a survey conducted by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, nearly half of the export companies expressed concern about the export situation in the second half of the year. In the first quarter of 2021, China’s export of household electrical appliances increased by 67.3% year-on-year compared with the same period last year. In the second quarter, this figure has dropped to 31.3%. According to Zhou Nan, Secretary General of the Household Appliances Branch of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, due to the continuous increase in the monthly export base last year and uncertainties such as shipping logistics, the quarterly and monthly year-on-year growth of China’s home appliance exports are expected to continue to narrow in the second half of the year. The annual export growth rate is flat or lower than that in 2020 (17%), at about 15%.

Export scale hit a new high in the first half of the year

With the gradual normalization of the impact of the new crown epidemic, global demand for home consumer products continues to grow. In the first half of 2021, the scale of imports of home appliances in major consumer markets has increased significantly over the same period last year. Thanks to China’s rapid resumption of work and production, from the second half of last year to the first half of this year, global home appliance manufacturing orders were concentrated in China, and China’s home appliance export share continued to increase. Data show that from January to June 2021, China’s exports of white goods (excluding color TVs and other audiovisual products) products are 57.74 billion US dollars, an increase of 46.3% over the same period last year, and an increase of 43.3% over the same period in 2019. The export scale has reached a record high over the same period in history.

In terms of different markets, China’s exports to Europe, America and ASEAN markets continued to grow at a high rate, emerging markets began to differentiate, and Latin American markets rebounded rapidly. Data show that in the first half of the year, China exported home appliances to 230 countries and regions around the world, of which 174 markets maintained growth, accounting for more than 70%; exports to 152 countries and regions increased by more than 20%. Exports to the top 20 markets accounted for 73.3% of the total export market share, and their total exports increased by 50.1% over the same period last year.

Data show that in the first half of 2021, China’s exports to North America and Europe were US$14.13 billion and US$15.8 billion, up 62.6% and 53.7% respectively over the same period last year, continuing a high growth trend; exports compared to the same period in 2019. The scale also increased by 58% and 51.5% respectively, greatly exceeding the same period in history.

Thanks to the pull of East Asian and ASEAN markets, in the first half of 2021, China’s overall exports to the Asian market will be 20.46 billion U.S. dollars, an increase of 30% over the same period last year. Among them, exports to Japan and South Korea increased by 30.9% and 41.6% respectively, and exports to ASEAN increased by 39.2%.

With the full signing of the RCEP agreement, East Asia, ASEAN, and South Asia, as key investment countries in the “Belt and Road” initiative, have brought more opportunities to the global layout of China’s home appliances. “At present, an industrial belt for vacuum cleaner products has gradually formed in Vietnam, and an air-conditioning industrial base has been formed in Thailand. In order to avoid the impact of tariffs, home appliance companies including Haier, TCL, and Midea have invested in India to build factories. These industrial bases are compared with domestic scale. The gap is still large, but as the domestic industry continues to upgrade, the local industrial chain will gradually improve, imports and exports will see two-way growth, and investment and trade scale growth potential is huge.” Zhou Nan said that in fact, in ASEAN and other “Belt and Road” countries Increasing production capacity layout in regions is also a key step in the global layout of the industry.

There are many challenges in export growth in the second half of the year

Home appliances are household durable consumer goods and the main household products during the epidemic. In order to maintain imports, countries have slowed down the implementation of some trade protection measures, including India, Saudi Arabia and other countries that have postponed the implementation of some technical barrier measures. In fact, in the first half of 2021, the export of taxable products involved in the US 301 investigation still increased significantly. According to the statistics of the China Chamber of Commerce for Import and Export of Machinery and Elecid.

tronic Products, the imports of the two batches of household electrical appliances that were subject to 25% additional tariffs by the US increased by 54% and 54% respectively over the same period last year. “The epidemic has slowed down the industrial transfer caused by Sino-US economic and trade frictions, and the pace of Chinese main enterprises investing and building factories around the world, making the production capacity exported from China more concentrated.” Zhou Nan sa

However, the contradiction between supply and demand caused by the rapid growth of exports has become increasingly prominent. Compared with the problems of raw materials and exchange rates, the problems of shipping costs and the supply of electronic chips have become more severe since 2021. “Home appliance products are mainly sold to Europe and the United States. In some home appliance export categories, the cost of containers on European and American routes has exceeded the value of the goods. Most small and medium home appliance companies in China still adopt the FOB model for their exports. Some customers have slowed down due to high freight rates. Half a year’s purchase demand, and even abandonment of goods. As export insurance has not yet taken effect before boarding, the cargo rights are still in the hands of the manufacturer, and the business risk of the company will inevitably increase.” Zhou Nan said that the high shipping cost has already transfer some European orders to home appliance manufacturers in Turkey and Eastern Europe. Since the second half of last year, Chinese home appliance export companies and customers have negotiated three rounds of price increases, but it is still difficult to offset the increase in costs. At present, the profits of small and medium-sized enterprises have fallen by 6-7 percentage points compared with the fourth quarter of last year. The profit is already meager. Products are on the verge of loss.

The shortage of electronic chips has also spread to the home appliance industry, and the impact is getting worse. “In recent years, the home appliance industry has developed rapidly in the direction of intelligence. The share of home appliances with touch and remote control has continued to increase. The shortage of electronic chips has forced many home appliance companies to buy at high prices and even cancel related product functions to ensure supply.” Zhou Nan said.