The future of home appliances in third and fourth-tier cities is huge

The policy of home appliances going to the countryside has enabled the industry to maintain its high-growth trend for many years, and it has also effectively promoted home appliance companies to achieve channel sinking. In the later period of the policy, sales of home appliances in third- and fourth-tier cities have already shrunk. The policy of home appliances to rural areas that has lasted for three years has already stopped. The prospects in China may not be optimistic. However, at the 2013 China Home Appliances Channel Business Conference held on the 20th, people in the industry stated that under the background of the acceleration of urbanization, the future business opportunities in the third and fourth tier cities are still huge. At the same time, improving the refinement of channel operations and maintaining an open attitude towards the integration of e-commerce is the future direction of development.

There are still potential analysts in third and fourth-tier cities. Since the implementation of the home appliances to rural areas policy, household appliances companies have experienced a sudden increase in sales volume in third and fourth-tier cities, and related companies have continuously increased their production capacity in recent years. However, the implementation of the home appliances to the countryside policy continued to decline in the late sales, household appliances in the third and fourth tier cities nearly saturated.

Although the industry’s policy on home appliances to the countryside has been mixed, the companies are positive about channel development. The withdrawal of stimulus policies and the surge in the stock market have become a problem faced by major companies.

In this regard, Guo Guangzhong, vice president of Huiyin Home Appliances Holdings, stated that there is still potential for digging in third and fourth-tier cities. Recently, the central government proposed to strengthen the social security system. With the improvement of the social security system, the consumption capacity of urban residents in the third and fourth levels will be enhanced and will stimulate consumption upgrades. At the same time, affordable housing will reach 30% by 2020, and the home appliance market will fully enjoy the huge market it brings.

In addition, the expansion of urban agglomeration areas and expansion of cities will enable more home appliance categories such as kitchen appliances and sanitary wares to form new growth points in the 3rd and 4th tier cities; the income doubling plan will lead residents to accept higher price of home appliances. A higher degree, speed up product replacement.

Li Hanyang, general manager of Dufangda Co., Ltd., which mainly sells home appliances in the rural market, told the China Securities Journal that the current market's spending power in third and fourth-tier cities is underestimated. Taking air-conditioning as an example, according to company statistics, air-conditioning products currently sold in the rural market are mainly inverter air conditioners with higher unit prices, and the consumption capacity of rural residents is not low. However, subject to objective factors, air conditioners in rural areas still account for about 10% of the total, and sales of air-conditioning products in the third and fourth tier cities are promising.

The development model needs to be adjusted Guo Guangzhong revealed that recently feedback from suppliers, household electrical appliance enterprises still have strong interest in the 3rd and 4th channels. However, the extensive development mode of the industry in previous years must be changed. The refinement of the business model has become an urgent task. At the same time, the three or four channel distributors should do a good job of user analysis and implement accurate marketing.

Li Xiaofeng, general manager of Tenda Electric, a leading home appliance chain appliance company in Jiangxi Province, told the China Securities Journal that the company focuses on the collection and analysis of customer information. The differentiated operation has enabled the company to maintain steady growth in sales and profits in Jiangxi.

In recent years, the rapid rise of e-commerce has exerted a fierce attack on the traditional home appliance retail industry. Due to the disadvantages of channels, the focus of e-commerce is still in the first and second-tier cities. However, Guo Guangzhong believes that the traditional three or four channels should be integrated into the e-commerce channel in the future and coordinate and cooperate with each other. Powerful companies can make their own e-commerce business. Without strength, they can rely on channel e-commerce to develop their own channels. Li Fang Yang, general manager of Dufangda, told the China Securities Journal that with 80,90 gradually becoming the main consumer in the future, the acceptance of e-commerce companies in the 3rd and 4th cities will increase explosively. Traditional retail companies should take advantage of their own outlets in three or four cities.