Kitchen Electric Enterprises Accelerate Integration to Capture Market

In recent years, China's home appliance industry has experienced rapid growth. However, the kitchen appliance industry has become a short board for the home appliance industry due to its small scale, lack of core competitiveness, and low overall profitability. In the face of growing market demand, kitchen and electric companies began to implement integration to seize the market.

Kitchen appliance industry is small, scattered, chaotic situation

As the “last profit high place in the household appliance industry”, there are no less than 1,000 brands in the kitchen electricity industry. The industry is basically divided into two groups. One group is a high-end enterprise of Poly. These enterprises are paranoid to the niche market for higher profit margins, such as Fang Tai, Siemens, Vantage and so on. The other faction is that the market is a mess of no-name companies, limited by funds, technical strength and other restrictions, these companies can only partial security three or four levels of the market, sales philosophy to puerile. It is difficult for kitchen electric products, which should have been popularized, to find a landing platform. For consumers, the price of the former is too high, and the quality of the latter is unreliable. They are often overwhelmed by choices.

Looking back at the 2012 annual report of the kitchen and electric appliance industry, most of the company’s sales are between 1 billion and 2 billion baht, compared with the annual sales of ordinary color TV companies that are generally close to 20 billion yuan. Kitchen appliance sales are far below the industry average. China's black and white products have already gone out of the country to participate in international market competition. However, there are few Chinese kitchen brands in the international market.

Urbanization brings rapid expansion of market space

The industry of kitchen appliances contains great business opportunities and the development prospects are very broad. It is understood that kitchens in Europe and North America continue to present high-end products. These products not only play an active role in improving the living environment and improving living standards, but also increase the profitability of the entire industry. This trend continues to spread to the Chinese market. The 2012 annual report of domestic kitchen and electric companies shows that the gross profit of air conditioners is only about 25%, but the gross profit rate of leading enterprises exceeds 50%.

In addition to rich profits and the growing market gap, with the development of urbanization, the integration of more than 200 million farmers into the city in the future will surely bring about changes in the way of life, and will also bring a lot of space to the kitchen appliances industry. Jiang Feng, chairman of the China Household Electrical Appliances Association, believes that the external environment has brought a good opportunity for the development of the kitchen appliance industry. The industry calls on leading companies to regard the kitchen and electric appliance industry as the key strategic development of the future.

Industry integration opened

Early this month, the United States, which had just promoted the listing of the Group, began to make strategic adjustments. A few days ago, Midea established the Kitchen Appliances Division to include kitchen appliances as one of its key industries.

Sun Mingyang, general manager of Midea Kitchen Appliances' domestic marketing company, put forward six marketing strategies. The first is to tie sales, that is, to order a full set of kitchen appliances according to the needs of consumers. Second, to promote marketing, divide the marketing into B2B and B2C business levels and plan different marketing activities. Third, In the transformation of customers, the distributors of Midea’s kitchen appliances should have multi-products, multi-channels, multi-link operations, management and control, and service capabilities. Fourth, breakthrough key and difficult markets, and the headquarters should be differentiated to promote marketing support and optimize the layout of marketing teams and customers. , vigorously develop new types of business, especially engineering group purchase and e-commerce; sixth, service transformation, in the research and development, quality, after-sales and branding and other aspects of force.

It is understood that in 2012, the sales revenue of Midea’s kitchen appliances exceeded 10 billion yuan, making it the first company in the kitchen and electric industry to achieve a scale of 100 billion sales. Jiang Feng believes that the United States has a good foundation in the field of kitchen appliances, complete categories, large-scale, can enhance the competitiveness of the entire kitchen appliances division.

The industry generally believes that the integration of the United States will have an impact on the existing industry structure. Companies with background support will invest more in technological innovation and process R&D. In contrast, Shuaikang, Sakura and other kitchen and electric companies have not stepped into the capital market and lack financing capabilities to enhance their core competitiveness. In the future, they will be at a disadvantage in the market. Jiang Feng believes that the integration of the United States is just a beginning. Under the drive of the market, integration and mergers and acquisitions will begin, and the new industry landscape will also begin.