24 Aug 2018
China's Kitchen Electrical Appliance Market
I. Market Overview
China’s kitchen appliance market has expanded considerably over recent years. According to mainland market surveys, the total value of China’s kitchen electrical appliance market exceeded RMB96 billion in 2017. Among the most in demand products were range hoods, water heaters, gas stoves and rice cookers.
In the long run, urbanisation is expected to drive steady expansion in the kitchen appliance industry. As of 2017, China’s urbanisation rate stood at 58.5% and is projected to rise by about one percentage point annually. Advances in urbanisation, the real estate market and smart home appliances are all seen as conducive to the development of the kitchen appliance market.
As consumers’ brand awareness continues to heighten, more emphasis is being placed on product design, functions and features, while price sensitivity is falling. Medium to high-end products are becoming the mainstay of the consumer market, while the demand for eco-friendly and energy-efficient kitchen appliances is also growing as consumer environmental awareness increases.
In addition to energy efficiency, ‘going smart’ is also an important development in the market. Industry sources predict that smart kitchen appliances will have a penetration rate of more than 20% by 2020, with total retail sales exceeding RMB50 billion. Chinese and foreign companies, including Siemens and Haier, are vying to develop smart kitchen systems and are focusing particularly on the connectivity of appliances with smartphones and tablet computers. For example, the connectivity-enabled Haier Smart Kitchen is focussed on the smart management of food ingredients.
Although built-in design is nothing new, it only began to gain popularity in the last few years. Examples include Fotile’s built-in electric steamer and Siemens’ built-in coffee machine. The kitchen appliances launched by Bosch in recent years all have built-in design. In step with the ‘holistic kitchen’ concept and as the mainstream consumer is getting younger and younger, built-in designs can best meet the demand of consumers. According to mainland surveys, the retail sales of built-in ovens and built-in microwave ovens showed year-on-year increases of 48% and 67% respectively in 2017.
Health appliances have become new growth areas as consumers have become more health- conscious in recent years, with high-speed blenders and multi-function glass kettles being good examples. In terms of benefits, high-speed blenders can crush the cell walls of fruit and vegetables for easier nutrient absorption. Multi-function glass kettles, meanwhile, are new healthcare-oriented products that can be used for making soup, medicated dishes or flower tea.
The localisation trend is also changing the kitchen appliance market landscape. According to expert analyses, many kitchen appliances in foreign households have no place in Chinese kitchens. For instance, induction cookers are popular in the US and Japan, with their flat design in a distinctly Euro-American style. In China, though, traditional cooking uses high flames and round concave pans. In view of this, many enterprises have launched induction cookers that can accommodate concave pans.
Imports of major kitchen appliances in 2017:
|841810||Combined refrigerator-freezers, fitted with separate external doors||180.08||9.22|
|841830||Chest-type freezers (< 800L)||4.02||36.78|
|841840||Upright-type freezers (< 900L)||31.98||34.72|
|85166010||Electromagnetic ovens (or induction cookers)||4.30||-28.28|
|85166030||Electric rice cookers||60.57||-16.77|
|85166040||Electric frying pans||0.25||-94.99|
|85166090||Other ovens (including grillers)||88.40||30.54|
Source: Global Trade Atlas
II. Market Competition
Among the leading home appliance brands, notably Fotile, Vatti, Macro, Vanward, Robam and Sacon, none of them enjoys an absolute advantage. Currently, in China’s kitchen appliance market, competition is mainly between businesses based in the Yangtze River Delta (YRD) and those operating out of the Pearl River Delta (PRD). The leading brands in the YRD are Fotile, Robam, Sacon and Dandy, while the leading brands in the PRD are Vatti, Vanward, Macro, Midea and Oupai.
Refrigerator market: A recent survey showed that retail sales of refrigerators reached 33.76 million units in 2017, a decrease of 0.6%. Different brands are vying to seize the market by upgrading the design and functions of their products. Multi-door refrigerators, especially four-door units, have become new market favourites. In the years to come, the consumption structure of the refrigerator market will move towards energy efficiency, high quality, large capacity, healthy living and the ability to satisfy a variety of demands.
Microwave oven market: Major brands in China’s microwave oven market include Galanz, Midea, Panasonic, Sanyo and Haier, with Galanz and Midea being the market leaders and the other brands dividing up the remaining demand between them.
Induction cooker market: Brands such as Midea, Galanz, Joyoung, Supor and Povos account for the lion’s share of the market. According to reports, the majority of induction cookers in the market are of the touch-control type, accounting for more than 80% of the market. In terms of product design, the trend is towards slim and light-weight. At present, sales of induction cookers in China concentrate in the first- and second-tier markets, while penetration in the third- and fourth-tier markets and the rural markets is relatively low.
Rice cooker market: According to survey data, the retail value of rice cookers in China reached RMB17.1 billion in 2017. The leading brands, including Gree, Midea and Supor, have all strengthened their development of induction heating (IH) rice cookers in a bid to be more competitive. This is expected to further promote the structural upgrade of the rice cooker industry.
Range hood market: According to survey data, retail sales of range hoods reached RMB46.7 billion in 2017, a 7.9% year-on-year rise. Technologies for producing range hoods are very mature nowadays. The leading brands are Fotile, Midea, Robam, Vatti and Siemens. When consumers purchase range hoods, product design, fume extraction rate and quietness are the three main considerations. While European range hoods are considered stylish in terms of exterior design, near-suction hoods have higher fume extraction rates.
Competition in the mainland kitchen appliance market has escalated from price war to technology war, with the focus of competition shifting towards the medium- to high-end market. In order to make breakthroughs, many manufacturers on the mainland have devoted a lot of effort to R&D. Players in the industry are now investing an average of 2% of their sales revenue in R&D and are designing different product models and functions to suit consumers’ cooking habits and the conditions of their homes.
III. Sales Channels
The main sales channels in the mainland kitchen and bathroom appliance market include department stores, supermarkets, e-commerce platforms, home appliance chain stores (e.g. Gome, Suning), building materials chain stores (e.g. Orient Home, HomeMart), and general merchandise chains (e.g. Carrefour, Walmart), with the latter selling primarily foreign brands.
After many years of development, home appliance retail chain stores have become one of the major channels for people in large and medium-sized cities to buy household appliances. Third- and fourth-tier cities are said to be the main consumers of electrical appliances at present, with the major home appliance groups, accordingly, actively expanding the number of stores in these cities and in the rural markets. Meanwhile, as an increasing number of kitchen and bathroom appliance manufacturers become aware of the strong attraction of home appliance chain stores to consumers, they are setting up dedicated displays and sales points inside chain-operated hypermarkets.
Over recent years, following the emergence of new building materials chain stores, household appliances, especially kitchen and bathroom appliances, have gradually made their way into several large-scale building materials supermarkets. Such building materials chain stores provide yet another alternative to traditional department stores and specialised electrical shops (including home appliance chain stores).
Kitchen appliances are also sold at home centres, but compared with traditional household appliance stores, the sale of home appliances at home centres is not as specialised and the sales volume is also much smaller than in the traditional household appliance stores. Home centres mainly offer kitchen and bathroom appliances that are closely related to the home, as well as small home appliances.
As the B2C and O2O models have gradually gained ground in the kitchen appliance market in recent years, all the leading kitchen appliance brands have built e-commerce platforms. At present, Fotile, Macro, Robam and Vatti have their own online malls. Meanwhile, Sacon, Vanward and others have opted to set up their own e-shops on Tmall and also authorised other e-commerce platforms, such as Suning.com and JD.com, to sell their products. According to a report on China’s electrical appliances online shopping market, in 2017 the value of China’s B2C home appliances online shopping market (including mobile platforms) reached RMB490.6 billion, up 27.6% year on year. All the companies are speeding up the establishment of offline experience stores and flagship stores to reinforce consumers’ online and offline experience and interaction as a way to make the shopping process quicker and more convenient.
Since the Detailed Implementing Rules for the Construction of Commodity Housing were issued by the Residence Industrialisation Promotion Centre under the Ministry of Housing and Urban-Rural Development, residential units sold by developers may provide not only interior decoration, but also a full set of kitchen and bathroom appliances. This trend of intensive interior decoration has seen kitchen appliances to move into people’s homes in a new way. Hence, co-operation with property developers is now an important channel for kitchen appliance sales. Among the kitchen appliance enterprises taking advantage of this new trend are Fotile, Sacon, Ariston and AO Smith.
Selected household appliance exhibitions to be held in the second half of 2018 and first half of 2019:
|10-12 Oct 2018||China International Kitchen and Bathroom Expo||National Convention and Exhibition Center, Shanghai|
|16-18 Dec 2018||Guangzhou International Kitchen Equipment and Supplies Exhibition||China Import and Export Fair Pazhou Complex, Guangzhou|
|8-11 Mar 2019||China (Beijing) International Exhibition for Kitchen Cabinets and Kitchen Electrical Appliances||New China International Exhibition Center, Beijing|
|14-17 Mar 2019||China Home Appliance and Consumer Electronics Expo||Shanghai New International Expo Center|
IV. Import Regulations
Starting from 1 August 2003, all products listed in the CCC (China Compulsory Certification) catalogue which have not obtained the necessary certificate and certification marking from designated organs cannot be imported to China, sold on the market or used in business operations. When imported products entering the country go through customs clearance, they must present the CCC to the entry-exit inspection and quarantine department at the port of entry. The inspection and quarantine department will select a certain proportion of the products for random marking inspection and will conduct tests in compliance with the relevant technical requirements under the CCC guidelines.
According to the Interim Administrative Measures for the Inspection of Imported Household Electrical Appliances, imported household electrical appliances must be inspected by the Commodity Inspection Bureau (or other inspection bodies approved by the bureau) within the timeframe specified in the contract. Uninspected complete machines of imported household electrical appliances may not be sold while uninspected parts may not be assembled.
The Safety and Sanitation Requirements for Disinfecting Tableware Cabinet (GB 17988-2008) were implemented on 1 February 2010. This revised national standard sets out more comprehensive regulations on the testing criteria and requires clearer and more detailed labelling and instructions for dish sterilisers. At the same time, disinfecting tableware cabinets must comply with the standard set out in GB 4706.1-2005 Safety of Household and Similar Electrical Appliances – Part 1: General Requirements and QB 2138.2-1996 Safety of Household and Similar Electrical Appliances – Particular Requirements for Disinfecting Tableware Cabinet to ensure that they can be safely used.
The Regulations for the Administration of the Recovery and Disposal of Waste Electrical and Electronic Products (or China WEEE) were implemented on 1 January 2011. Under these regulations, five categories of products, including refrigerators, became the first batch of products to be recovered and dismantled in accordance with the national standards. The regulations stipulate that only enterprises qualified to dispose of electrical and electronic products may dismantle waste electrical and electronic products, extract raw materials from them or carry out final disposal in compliance with the environmental protection requirements.
Industrial standards for five types of kitchen appliances, including electric frying pans, electric stoves, commercial soymilk makers, grill toasters, and electric stew-pots and similar appliances, went into force on 1 June 2013. Of these, the standard for electric frying pans has been revised. These industrial standards aim to regulate the normal and orderly development of the small kitchen appliance industry.
Rules of Energy Efficiency Labelling for Household Induction Cookers (Revised), Rules of Energy Efficiency Labelling for Heat Pump Water Heaters and Rules of Energy Efficiency Labelling for Range Hoods were implemented on 1 January 2015 for regulating the usage, specification and product inspection for energy efficiency labels.
A new version of the national standard Minimum Allowable Values of Energy Efficiency and Energy Efficiency Grades for Household Induction Cookers (GB 21456-2014) has been effective since 1 January 2015. In this new version, the scope of application is extended to induction cookers in the 700W-3,500W range, while the requirements and methods of testing have also been revised. On 1 April 2015, the national standard Minimum Allowable Values of Energy Efficiency and Energy Efficiency Grades for Domestic Gas Cooking Appliances (GB 30720-2014) became effective. In both of these standards, three energy efficiency grades have been set: Grade 1 represents the most energy efficient while Grade 3 represents the least energy efficiency. In line with official requirement, any products with an energy efficiency value lower than Grade 3 have to be phased out. The standards also lay down specific methods for testing energy efficiency.
The revised national standard Maximum Allowable Values of the Energy Consumption and Energy Efficiency Grade for Household Refrigerators (GB 12021.2-2015) took effect on 1 October 2016 replacing the older version (GB 12021.2-2008). The new standard sets five energy efficiency grades: Grade 1 represents the most energy efficient while Grade 5 stands for the least energy efficient. All products deemed to have an energy efficiency value lower than Grade 5 have to be phased out. Refrigerators must be affixed with energy efficiency labels to indicate their energy efficiency grading, with any lacking labelling prohibited from being sold. The new version features much higher requirements. Under the revised standard, the maximum allowable value of energy consumption for Grade 1 products is about 40% lower than that of the former Grade 1 products.
The Safety Handbook on Food Contact Materials released by the Electric Rice Cooker Committee of the China Household Electrical Appliances Association in April 2017 made clear provisions regarding food contact materials for electric rice cookers. For example, perfluorooctanoic acid (PFOA), perfluorooctanesulfonic acid (PFOS) and their salts may not be used as processing additives on the coating of the inner shell of cookers.
Under the National Product Quality Supervision and Spot Check Plan 2017 released by the General Administration of Quality Supervision, Inspection and Quarantine, products including ovens and grillers, range hoods, refrigerators and kitchen appliances (such as soymilk makers and juicers) and rice cookers are subject to spot checks.
Household and Similar Refrigerating Appliances (GB/T 8059-2016) took effect on 1 July 2017, replacing the four standards: Household Refrigerating Appliances – Refrigerators (GB/T 8059.1-1995), Household Refrigerating Appliances – Refrigerators (GB/T 8059.2-1995), Household Refrigerating Appliances – Refrigerator-Freezer (GB/T 8059.3-1995) and Household Refrigerating Appliances – Frost-free Refrigerators, Frost-Free Refrigerator-Freezers, Frost-Free Frozen Food Storage Cabinets and Frost-Free Food Freezers (GB/T 8059.4-1993). The new version introduces changes to the key testing requirements, such as electricity consumption testing and noise testing, and specifies a number of new requirements, including temperature reduction testing and cooling capacity testing.
Minimum Allowable Values of Energy Efficiency and Energy Efficiency Grades for Electric Rice Cookers (GB 12021.6-2017) took effect on 1 June 2018. This new standard not only covers IH rice cookers but refines the formula for calculating heating efficiency to more accurately reflect the true energy efficiency of the rice cooker by comprehensively taking into account the energy efficiency and performance indicators. At the same time, electric rice cookers must be affixed with an energy efficiency label before they can be sold.
The State Council reduces Most-Favoured Nation (MFN) tariffs for 1,449 taxable items of daily consumer goods, including apparel, footwear and headgear, cosmetics and kitchen supplies, from 1 July 2018 in order to further expand the opening-up process and to better satisfy consumer demand.
The 2018 import tariffs of selected kitchen appliances:
|84181010||Combined refrigerator-freezers, fitted with separate external doors (> 500L)||10|
|84181020||Combined refrigerator-freezers, fitted with separate external doors (200L~500L)||8|
|84181030||Combined refrigerator-freezers, fitted with separate external doors (< 200L)||8|
|84182110||Household-type refrigerators (> 150L)||8|
|84182120||Household-type refrigerators (50L~150L)||8|
|84182130||Household-type refrigerators (< 50L)||8|
|84182910||Household-type refrigerators (semiconductor freezing type)||8|
|84182920||Household-type refrigerators (electrical absorption type)||8|
|84182990||Household-type refrigerators (others)||8|
|84183010||Chest-type freezers (of a refrigerating temperature of -40oC or lower)||9|
|84183021||Chest-type freezers (> 500L)||12|
|84183029||Chest-type freezers (others)||8|
|84184010||Upright-type freezers (of a refrigerating temperature of -40oC or lower)||9|
|84184021||Upright-type freezers (> 500L)||15|
|84184029||Upright-type freezers (others)||8|
|85166010||Electromagnetic ovens (or induction cookers)||7|
|85166030||Electric rice cookers||7|
|85166040||Electric frying pans||7|
|85166090||Other ovens (including grillers)||7|
|85167190||Other electro-thermic coffee or tea makers||7|
|85167290||Other bread makers||7|
|85167910||Electro-thermic water dispensers||7|
|85167990||Other electro-thermic appliances||7|
Source: Customs Import and Export Tariff of the People's Republic of China 2017; MFN Tariff Adjustment Table for Imported Consumer Goods issued by the Ministry of Finance in 2018