High-end prod­ucts drive growth of the home-ap­pli­ance mar­ket

China Daily (Canada) - - SHANGHAI - By WU YIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

Wang Jing, a 32-year-old Shang­hai house­wife, had a long shop­ping list in her hands when she vis­ited an elec­tronic home-ap­pli­ance fair in Shang­hai in late March.

She was look­ing for the lat­est mod­els of wa­ter fil­ters, air pu­ri­fiers, small ro­bots to clean floors and win­dows, a lar­ge­size LED screen tele­vi­sion and some kitchen­ware, such as a toaster which can also brew cof­fee and heat beacon and ham.

Her to­tal budget was 80,000 yuan ($12,825).

“If I had more money I would re­place all my home ap­pli­ances with the lat­est mod­els. They are so smart and can re­ally free house­wives like me to en­joy a higher qual­ity of life,” Wang said.

China’s elec­tronic home­ap­pli­ance mar­ket is ex­pand­ing with high-end prod­ucts and en­vi­ron­men­tal mod­i­fiers be­ing ma­jor growth driv­ers, ac­cord­ing to mar­ket in­sid­ers and man­u­fac­tur­ers.

Spend­ing money on those ap­pli­ances and gad­gets ben­e­fits her life on a daily ba­sis, Wang said.

“In the past,

I might be price- sen­si­tive,’’ she said. “Now I fo­cus more on how they can func­tion to give me bet­ter ex­pe­ri­ences.”

China’s elec­tronic home­ap­pli­ance mar­ket may ex­pand to some 1.24 tril­lion yuan in 2014, a 3-per­cent year-on-year growth rate, ac­cord­ing to data from AVC.

And in the long-term, the home-ap­pli­ance mar­ket could grow to 9 tril­lion yuan by 2020, said Jiang Feng, head of the man­age­ment com­mit­tee of the China House­hold Elec­tri­cal Ap­pli­ance As­so­ci­a­tion.

At the Ap­pli­ance World Expo in Shang­hai in late March, many con­sumers wanted to try the ap­pli­ances.

“When the mar­ket was rel­a­tively small and con­sumers had limited choices, ad­ver­tise­ments could be de­ci­sive in what a con­sumer might buy. How­ever, to­day we may share with one an­other our ex­pe­ri­ences with a par­tic­u­lar prod­uct, and per­haps a WeChat pic­ture can be a best pro­mo­tion,” said Liu Yumo, who was try­ing a microwave oven at the fair.

Liu said she saw the microwave on a Weibo post from her friend, who said it was the best she ever used. Then Liu asked the price and brand of the prod­uct.

“I am re­ally go­ing to buy this, it’s com­pact, ef­fec­tive and quiet,” Liu said in a com­ment on her Weibo post and at­tached a pic­ture of the oven. It cost about 3,500 yuan, al­most 10 times that of Liu’s cur­rent one.

Con­sumers with com­pet­i­tive pur­chas­ing power are look­ing for prod­ucts which give them bet­ter ex­pe­ri­ences, an­a­lysts said.

A PwC sur­vey found that con­sumers want to give feed­back more than ever.

More than 90 per­cent of 900 China-based re­spon­dents and 55 per­cent of the some 15,000 global re­spon­dents to the sur­vey said they posted on so­cial me­dia pos­i­tive or neg­a­tive com­ments about their ex­pe­ri­ences with a prod­uct or brand.

“They know what they want, and they do not need the brands to pro­mote some fancy con­cepts or ideas. They just pop up and try the prod­ucts, pay or leave,” said Wu Zheng, a sales­man at the fair.

To­day’s con­sumers are more chal­leng­ing be­cause they are de­tail-ori­ented and quite con­cise about what they need, he said.

“From dis­play to func­tion in­tro­duc­tions and show­room ex­pe­ri­ence, ev­ery step should make a con­sumer happy in­stead of con­fused,” Wu said.

Yu Liangxing, an an­a­lyst with AVC, says e-com­merce has be­come a ma­jor driver among sales chan­nels to con­sumers.

“We found that chain stores, depart­ment stores and hy­per­mar­kets are tak­ing less of a share of elec­tronic-ap­pli­ance sales, while spe­cial­ties, neigh­bor­hood stores and e-com­merce plat­forms are ex­pand­ing fast,” Yu said.

By De­cem­ber 2013, 10.3 per­cent of tele­vi­sions were sold through on­line- shop­ping plat­forms in China, and the fig­ures for re­frig­er­a­tors and wash­ing ma­chines are close to 10 per­cent, he said.

For air con­di­tion­ers, how­ever, on­line shop­ping might not be a pop­u­lar choice among con­sumers be­cause de­liv­ery and in­stal­la­tion ser­vices af­ter the sale may not be as good as the prod­ucts them­selves.

“About 10 per­cent of on­line shop­pers who bought air con­di­tion­ers on e-com­merce gave neg­a­tive feed­back be­cause of un­happy ex­pe­ri­ences with de­liv­ery and in­stal­la­tion. The unique fea­ture of a par­tic­u­lar prod­uct also in­spires us to think of di­ver­si­ties of sales chan­nels of home ap­pli­ances,” said Yu.

Cui Xiang, brand man­ager of a high-end Ger­man home ap­pli­ance, said he finds realestate de­vel­op­ers are a great sales chan­nel.

“De­vel­op­ers may sub­mit their plans and de­mands for our prod­ucts which will be in­cluded in a gift pack­age to the own­ers of the apart­ments,” Cui said.

“The de­mands may be con­sis­tent with the styles and func­tions of the apart­ments and the rooms in­side, such as car­peted floors may need a car­pet steamer, and an open kitchen needs pow­er­ful Kitchen ven­ti­la­tion.”

Each pack­age of home ap­pli­ances may rep­re­sent a com­bined value of up to 400,000 yuan ($64,000), he said.

“Com­pared to the to­tal price of the apart­ment, it is a small fig­ure. A home that is not func­tional means lit­tle while our prod­ucts may at­tach more mean­ing to the space,” Cui said.

Some high-end brands mar­ket through exclusive chan­nels, such as invit­ing po­ten­tial con­sumers to show­rooms.

“Trans­ac­tions are in­deed im­por­tant for us, but vis­it­ing the show­room by in­vi­ta­tiononly may make our sales process lean and pre­cise,” said Hong Wei, a sales­man with an Ital­ian kitchen­ware brand.

GAO ERQIANG / CHINA DAILY

Vis­i­tors take pho­tos of prod­ucts dis­played at the Ap­pli­ance World Expo held in Shang­hai on March 21.

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