14 Aug 2017
China's Kitchen Electrical Appliance Market
I. Market Overview
1. China’s kitchen appliance market expanded robustly in recent years. According to mainland market surveys, the total value of China’s kitchen electrical appliance market exceeded RMB100 billion in 2016. Major products include range hoods, water heaters, gas stoves and rice cookers.
2. In the long run, urbanisation is expected to drive steady expansion in the kitchen appliance industry. As of 2016, China’s urbanisation rate stood at 57.4% and is projected to go up by about one percentage point annually. Advances in urbanisation, the real estate market and smart home appliances are conducive to the development of the kitchen appliance market.
3. 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 consumers’ environmental awareness increases.
4. In addition to energy efficiency, ‘going smart’ is also one of the important developments in the market. Industry sources predict that smart kitchen appliances will have a penetration rate of over 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 developed for the smart management of food ingredients.
5. 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, built-in dishwashers and built-in microwave ovens showed year-on-year increases of 60.6%, 157.8% and 42.8% respectively in 2016.
6. Health appliances have become new growth areas as consumers have become more health-conscious in recent years. High-speed blenders and multi-function glass kettles are good examples. High-speed blenders can crush the cell walls of fruit and vegetables for easier nutrient absorption. Multi-function glass kettles are new healthcare products that can be used for making soup, medicated dishes and flower tea.
7. The localisation trend is 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 and their flat design is in the Euro-American style. But in China, traditional cooking uses high flames and round concave pans. In view of this, many enterprises launched induction cookers that can accommodate concave pans.
Imports of major kitchen appliances in 2016:
|841810||Combined refrigerator – freezers, fitted with separate external doors||164.88||-31.06|
|841830||Chest-type freezers (< 800L)||2.94||-21.28|
|841840||Upright-type freezers (< 900L)||23.74||-11.83|
|85166010||Electromagnetic ovens (or induction cookers)||5.99||50.37|
|85166030||Electric rice cookers||72.77||20.01|
|85166040||Electric frying pans||4.91||16.18|
|85166090||Other ovens (including grillers)||67.72||15.34|
Source: Global Trade Atlas
II. Market Competition
1. According to industry sources:
- The top five refrigerator production bases are Anhui, Guangdong, Jiangsu, Shandong and Zhejiang.
- The top five microwave oven production bases are Guangdong, Tianjin, Shanghai, Anhui and Shandong.
- The top five electric water heater production bases are Guangdong, Jiangsu, Shandong, Hubei and Zhejiang.
- The top five electric rice cooker production bases are Guangdong, Shanghai, Zhejiang, Jiangsu and Shandong.
2. Among the leading home appliance brands such as Fotile, Vatti, Macro, Vanward, Robam and Sacon, none of them enjoys absolute advantage. Currently, in China’s kitchen appliance market, competition is mainly between the Yangtze River Delta (YRD) and the Pearl River Delta (PRD). Leading brands in the YRD are Fotile, Robam, Sacon and Dandy, while leading brands in the PRD are Vatti, Vanward, Macro, Midea and Oupai.
3. Refrigerator market: A recent survey showed that retail sales of refrigerators reached 34.62 million units in 2016, down 0.7%, with retail value reaching RMB96.4 billion, down 1.8%. 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.
4. Microwave oven market: Major brands in China’s microwave oven market include Galanz, Midea, Panasonic, Sanyo and Haier, with Galanz being the market leader and the other brands fighting for the rest of the pie. The ‘holistic kitchen’ concept has fuelled the growth of built-in microwave ovens. According to survey data, the number of built-in kitchen appliance brands in China increased by 40% to 124 in 2016. The retail sales value of built-in kitchen electrical appliances reached RMB4.74 billion, representing a year-on-year increase of 67.9%.
5. 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 mainly concentrate in first- and second-tier markets, while penetration in third- and fourth-tier markets and rural markets is relatively low.
6. Rice cooker market: According to survey data, China manufactured 340 million electric rice cookers in 2016, nearly 50 million of which were for export. Retail sales reached RMB16.3 billion, up 8.8% year on year. Leading brands including Gree, Midea and Supor all strengthened their development of induction heating (IH) rice cookers. This is expected to further promote the structural upgrade of the rice cooker industry.
7. Range hood market: According to survey data, retail sales of range hoods reached RMB38.4 billion in 2016, up 12.3% year on year, with leading brands including Fotile, Midea, Robam, Vatti and Siemens. Technologies for producing range hoods are very mature nowadays. When consumers purchase range hoods, product design, fume extraction rate and quietness are the three main considerations. While European-style range hoods are trendy in exterior design, near-suction hoods have higher fume extraction rates.
8. 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 efforts to R&D. Players in the industry are now investing an average of 2% of sales in R&D and are designing different product models and functions to suit consumers’ cooking habits and conditions of their homes.
III. Sales Channels
1. Sales channels in the mainland kitchen and bathroom appliance market fall into two types: traditional channels and new channels. Traditional channels mainly include large, medium and small department stores, as well as specialist electrical shops. New channels are mainly 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) selling primarily foreign brands.
2. 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 buying household appliances. Third- and fourth-tier cities are said to be the main consumers of electrical appliances at present, and expanding the number of specialised stores in these cities and in the rural market has become the main direction of major home appliance manufacturers. 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 image stores inside chain-operated hypermarkets.
3. In recent years, following the emergence of new building materials chain stores, household appliances, especially kitchen and bathroom appliances, have gradually made their way into some 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).
4. 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 traditional household appliance stores. Home centres mainly offer kitchen and bathroom appliances closely related to the home as well as small home appliances.
5. As the B2C and O2O model has 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 2016, the value of China’s B2C home appliances online shopping market (including mobile platforms) reached RMB384.6 billion, up 27.9% 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.
6. Since the Detailed Implementing Rules for the Construction of Commodity Housing were issued by the Residence Industrialisation Promotion Centre under the Ministry of Construction (now renamed 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 prompted kitchen appliances to move into people’s homes in a new way. Hence, co-operation with property developers has become an important channel for kitchen appliance sales. Kitchen appliance enterprises taking advantage of this new trend include Fotile, Sacon, Ariston and AO Smith.
7. Selected household appliance exhibitions to be held in the second half of 2017 and first half of 2018:
|21-23 October 2017||China International Kitchen and Bathroom Expo||National Convention and Exhibition Center, Shanghai|
|8-11 March 2018||Appliance & Electronics World Expo||Shanghai New International Expo Center|
|9-12 March 2018||China International Exhibition for Kitchen & Sanitary Ware||China International Exhibition Center, Beijing|
|5-8 June 2018||Kitchen & Bath China||Shanghai New International Expo Center|
IV. Import Regulations
1. 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 are not allowed to be imported into 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 pick a certain proportion of the products for random marking inspection and will conduct tests in compliance with the relevant technical requirements under CCC.
2. 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 inspection organs approved by the bureau within the timeframe provided in the contract. Uninspected complete machines of imported household electrical appliances may not be sold while uninspected parts may not be assembled.
3. Under the Noise Limit Value for Household or Similar Electrical Appliances (GB 19606-2004), a set of mandatory national standards officially implemented on 1 August 2005, the label or manual of six types of products, namely refrigerators, air-conditioners, washing machines, microwave ovens, range hoods and electric fans must indicate the noise value of the product, which may not be higher than the limit value. The difference between the measured value and the indicated value is only allowed at 3dB. From 1 June 2016 onwards, according to the new Measures for the Administration of Energy Efficiency Labels, all household air-conditioners and refrigerators manufactured and sold in or imported into China must be affixed with a marking showing the words ‘China Energy Label’, otherwise they may not be sold in the market. Goods sold online are also subject to these measures. Energy-efficient products sold online must display the relevant energy efficiency label in a prominent position of the product information website page.
4. The Rules for the Operation of Household Electrical Appliance Specialty Stores (SB/T 10429-2007), an industry standard for domestic trade, became effective on 1 December 2007. The standard sets out regulatory requirements for specialised household appliance stores in terms of business venue, operation facilities, merchandise sourcing, product sale, quality assurance, after-sale service and staff management, which apply to chain-operated or independent specialised household appliance stores.
5. A new set of national standard for household gas stoves (GB 16410-2007) was implemented on 1 May 2008. Compared with the old standard, the new standard has made a number of amendments to main flame output, cut-off protection device, environmental protection provisions, combustion agents and inspection rules. Compared with the old standard, certain safety and technical parameters of stove products have been greatly enhanced.
6. Since 1 July 2008 China has implemented electronic supervision over household electrical appliances and gas stoves which are subject to management by industrial product production licence and CCC. These products must join the product quality electronic supervision network and indicate the unified electronic supervision code on their packaging before they can leave factory for sale in the market.
7. The revised national standard The Maximum Allowable Values of the Energy Consumption and Energy Efficiency Grade for Household Refrigerators (GB 12021.2-2015) came into effect on 1 October 2016, replacing the old version (GB 12021.2-2008). Under this standard, five energy efficiency grades are set: Grade 1 means most energy efficient and Grade 5 most energy consuming. Products with energy efficiency values lower than Grade 5 have to be phased out. The standard requires that refrigerators must be labelled with energy efficiency stickers which specify the energy efficiency grades. Refrigerators with no such stickers are not to be sold. According to reports, the requirements have been substantially raised in the amended standard. The energy consumption rate of the new Grade 1 products is about 40% lower than that in the old version.
8. The national standard Performance Requirements and Measuring Methods for Electric Kettles (GB/T 22089-2008) implemented on 1 May 2009 sets out requirements for the various performance parameters of electric water boilers, e.g. limits on capacity variance, requirements for boiling water and dispensing water, and the cut-off time for water bringing to the boil. The new standard also introduced grades for the heat efficiency and life span of electric water boilers for the first time.
9. Safety and Sanitation Requirements for Disinfecting Tableware Cabinet (GB 17988-2008) was implemented on 1 February 2010. The revised national standard sets out more comprehensive regulations on the testing criteria for dish sterilisers. At the same time, 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.
10. 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 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, and carry out final disposal in compliance with environmental protection requirements.
11. 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.
12. 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.
13. 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 with power 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 stands for most energy efficient while Grade 3 stands for most energy consuming. Products with energy efficiency values lower than Grade 3 have to be phased out. The standards also lay down specific methods for testing energy efficiency.
14. 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 the 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.
15. 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.
16. The import tariffs of selected kitchen appliances in 2017:
|84181010||Combined refrigerator – freezers, fitted with separate external doors (> 500L)||10|
|84181020||Combined refrigerator – freezers, fitted with separate external doors (200L~500L)||15|
|84181030||Combined refrigerator – freezers, fitted with separate external doors (< 200L)||15|
|84182110||Household-type refrigerators (> 150L)||10|
|84182120||Household-type refrigerators (50L~150L)||10|
|84182130||Household-type refrigerators (< 50L)||10|
|84182910||Household-type refrigerators (semiconductor freezing type)||30|
|84182920||Household-type refrigerators (electrical absorption type)||15|
|84182990||Household-type refrigerators (others)||30|
|84183010||Chest-type freezers (of a refrigerating temperature of -40oC or lower)||9|
|84183021||Chest-type freezers (> 500L)||23|
|84183029||Chest-type freezers (others)||30|
|84184010||Upright-type freezers (of a refrigerating temperature of -40oC or lower)||9|
|84184021||Upright-type freezers (> 500L)||15|
|84184029||Upright-type freezers (others)||30|
|85166010||Electromagnetic ovens (or induction cookers)||15|
|85166030||Electric rice cookers||8|
|85166040||Electric frying pans||15|
|85166090||Other ovens (including grillers)||10|
|85167190||Other electro-thermic coffee or tea makers||16|
|85167290||Other bread makers||32|
|85167910||Electro-thermic water dispensers||32|
|85167990||Other electro-thermic appliances||16|
Source: Customs Import and Export Tariff of the People's Republic of China 2017