Yanxiu Gu, Product specialist, Chinese equities ODDO BHF AM.
” Leading players … recognized early the need for global expansion and have achieved impressive progress.”
In the 1990s and early 2000s, Japanese home appliance brands like Sony and Toshiba were synonymous with quality and innovation and the top choice for Chinese households. Stories abounded of the Chinese middle class traveling to Japan to purchase items as niche as toilet seats. However, at the recent China Home Appliances and Consumer Electronics Expo, Japanese brands were notably absent. Nowadays, Chinese home appliances brands have secured a dominant position in their home market. In 2020, Chinese domestic brands held 78% market share in refrigerators, 71% in washing machines, and an impressive 93% in air conditioners.
“If you don’t go global, you’ll go out (of the competition)“, the co-founder of Chinese electronics conglomerate TCL Group, Li Dongsheng, famously said. TCL is the world’s second largest brand of televisions.
GO GLOBAL OR GET KNOCKED OUT: THE ASCENDANCY OF CHINESE BRANDS IN INTERNATIONAL MARKETS
China’s vast market, with its 1.4 billion people and a comprehensive manufacturing chain, has been essential to home appliance firms. However, with a slowing population growth and weakening real estate sales, the future of the domestic home appliance market seems less promising, with only 3.55% p.a. growth in the market expected from 2024 to 2029, according to Statista. Leading players like Haier and TCL recognized early the need for global expansion and have achieved impressive progress.
Haier (stock price YTD* +47%; overseas revenue: 52.2% in 2023 vs. 19.3% in 2014) is the largest global major home appliances company, with 22.1% market share in refrigeration, 22.2% in laundry, and 22% in freezers. As a pioneer of globalization among Chinese companies, Haier made a bold move by building a factory in the United States in 1999. In 2012, it acquired the New Zealand brand Fisher & Paykel, in 2016 the home appliance business of the US conglomerate General Electric, and in 2019 the Italian brand Candy. In December 2023, Haier announced the acquisition of Carrier Refrigeration Benelux B.V., the commercial refrigeration business of Carrier Global Corporation, enhancing its foothold in the European market and strengthening its global competitiveness.
TCL Electronics (stock price YTD* +135.8%; overseas revenue: 59.2% vs. 36.6% in 2014), also started its global journey in 1999, choosing Vietnam to build its first overseas production base. In 2004 TCL acquired French company Thomson’s color TV business. Although the joint venture established after this acquisition went bankrupt, it was strategically successful for TCL in giving it access to advanced technology and knowledge of the European market.
Hisense (stock price YTD* +90%; overseas revenue: 32.6% in 2023 vs. 27.2% in 2014), the third largest global TV brand, is also an active strategic buyer. In 2018, Hisense acquired the European high-end TV brand Gorenje and the TV business of the leading Japanese player Toshiba.
