china appliance makers flip the retail switch to survive - home appliances manufacturers in china
HONG KONG (Reuters)-
Haier Electronics Group Co. , Ltd. and other Chinese white Home Appliance Manufacturers (1169. HK)
Their distributors and extended to logistics and e-commerce
In order to win the fierce competition of profits in the world's largest home appliance market.
This strategic shift is expected to hurt retailers such as Suning Commercial Group Co. , Ltd. , a market leader (002024. SZ)
Gome Holdings Limited (0493. HK)
With the easing of economic growth,
Savvy consumers have strengthened what has been cut
Fierce competition of $89 billion (57.
"The shift of manufacturers to e-commerce has become the norm
Logistics distribution, hoping to enrich the customer's online shopping experience, while maintaining profit margins without being eroded by the middle class.
People, "said the First Shanghai Securities chief strategist of the Lenas industry.
"In addition to ensuring market share, it is more about surviving in a competitive market," he added . ".
Chinese home appliance manufacturers, already facing higher labor and operating costs, are currently vying for the same customer with their distributors and online markets, and, in general, are reluctant to pay extra for local products.
Distributors often weaken manufacturers by offering discounts or financing for purchases, which in turn reduces profit margins for everyone in the industry: Second-
The top-ranked GOME, backed by private equity firm Bain Capital, posted a loss of 2012.
Now manufacturers like Haier, GD Midea Holding Co. , Ltd. 000527.
Shenzhen, Hisense Kelon Electric Holding Co. , Ltd (000921. SZ)
Is fighting back.
Benefits of controlling distribution and e-commerce
Business is obvious: manufacturers can expand into China's vast inland region, where most of the sales growth is expected to come from, without having to open physical stores or share their already meager profits with retailers.
Home appliances are large enterprises in China, and the value of the domestic market is expected to grow by about 1-
According to Euromonitor, a consultancy, the fifth place in the next two years will reach $105 billion.
This potential for growth is to attract whirlpool (WHR. N)
The world's largest household appliance manufacturer has agreed to buy a large stake in China's Hefei Rongshida Sanyo Electric Co. , Ltd (600983. SS)
$0. 552 billion. E-
Business is also booming and is expected to double the value of home appliances they buy online in the next two years to 257.
54 billion yuan ($42. 06 billion).
Guodian Midea, Hisense, air-
Air conditioning manufacturer Gree Electric Appliance Co. , Ltd. 000651. SZ)
I have told investors that they want to expand distribution and e-commerce
But Haier seems to be the most advanced so far.
On September, the company signed an undisclosed transaction with the Singapore company Global Logistics to expand its distribution and Logistics network, especially in less developed cities, the company said, it has enough cash to finance the business.
"In order to maintain our long-term
In the Internet age, we must think about how to track consumer trends seamlessly to meet consumer needs. Yang Mian, chairman of Haier, said in the company's financial report.
A handful of foreign companies trying to take a slice of the Chinese market have also shifted their attention to the Internet. U. S. -
Headquartered in Home Depot (HD. N)
The world's largest home improvement chain said late last year it would close all seven large stores, focusing on online sales and specialty stores.
Analysts said that despite the fierce competition, Haier's investment could be rewarded because they targeted less-developed cities and ventured into the virgin land to a large extent.
"They have the first advantage and it will give them a chance to succeed because in the end, when someone needs to build their network, they can use the Haier network," said Nicholas stouholm.
Wilson, financial retail analyst at Shin hung Ki.
"Suning has no distribution channels in the third and fourth tier cities, and it takes time to establish warehouse business and logistics business.
At the same time, Suning is seeking new sources of revenue through its involvement in banking and online financial services.