Editor's note:.
When "uncertainty" becomes the norm, how should companies in the midst of it respond? Do you have some magic of certainty?.
Looking back over the past two decades, the Internet wave has made thousands of industries take off. On the one hand, the Internet has penetrated into every corner, and the development of "Internet plus" related industries has gone by leaps and bounds; On the other hand, "traditional" enterprises can be described as low-key or even "unknown" compared to the rising players.
But they are a force that cannot be ignored. Industry and manufacturing are important weapons of a great country, and many of them are hidden champions in certain fields. There are also many enterprises that, although not large in scale, have strong individual capabilities. Therefore, paying attention to them is of great significance.
To this end, Yidu Finance has launched a special plan for "Innovation Power", focusing on less bustling industries and seemingly low-key enterprises. By producing a series of in-depth reports, it can gain insights into the "innovation" power that has been overlooked or overshadowed by prosperity but has profound influence. .
On July 17th, the National Bureau of Statistics released the "half year report card" of the Chinese economy. In the first half of this year, China's GDP increased by 5.5% year-on-year, and the export value of the "three carriages" of GDP reached 11458.8 billion yuan, a year-on-year increase of 3.7%.
The home appliance industry, with both export and consumption attributes, has attracted the attention of countless people for its development. As a major producer and exporter of household appliances, China has recently submitted a good semi annual report.
The latest statistical data from the General Administration of Customs shows that from January to June 2023, the export quantity of household appliances in China was 1728.931 million units, a year-on-year increase of 1.4%, and the export value was 296.7 billion yuan, a year-on-year increase of 5.2%.
In fact, due to previous fluctuations in the epidemic, rising raw materials, high overseas inflation, and international transportation costs, home appliance exports have been under significant pressure since the second half of last year.
Fortunately, through this transcript, the outside world has seen clear signs of recovery in home appliance exports. Especially under the influence of frequent global high temperatures, seasonal home appliances such as air conditioners and fans have experienced a small export boom, continuously driving the recovery of the home appliance export market.
Such achievements cannot be separated from the long-term layout of Chinese home appliance brands over the past 20 years. As a highly representative category in the export category, what unique strategies do Chinese home appliances exhibit during their overseas journey?.
01
From being passively beaten to achieving a "dimensionality reduction strike".
Looking back more than 30 years, when foreign brands entered the Chinese market, Chinese home appliance brands had little resistance. But with the rise of domestic home appliance brands such as Haier, Gree, TCL, and Hisense, Chinese home appliances have not only completed a comeback, but also achieved a "dimension reduction strike" on the way out.
In 2001, China joined the World Trade Organization, and Chinese home appliance companies leveraged the international market through cost-effective products, overseas mergers and acquisitions, and self built bases. As of 2021, the total output value of China's home appliance industry has increased from 500 billion yuan to 1.5 trillion yuan, and the export value has grown from less than 10 billion US dollars to nearly 100 billion US dollars.
From following to imitating, and then to counter surpassing, Chinese home appliances have finally reached the "C position". According to statistical data, China's household appliance production accounts for nearly 60% of the global market share, and its trade volume accounts for over 30% of the global market share.
This also means that after decades of struggle, Chinese home appliance enterprises have finally ranked among the top. Japanese home appliances, which once dominated the domestic market, have also been replaced by domestic brands. Overseas, Chinese home appliance brands are also getting better and better. In some developed countries, Chinese home appliance brands have become mainstream.
In science fiction writer Liu Cixin's "Three Body Problem," aliens have a method of attacking the solar system by descending it from three-dimensional space to two-dimensional space, called "dimensionality reduction strike.". Later, this term quickly spread in the business field to describe a business mindset where a group with high-end technology or advantageous resources directly enters the disadvantaged group's territory, causing a crushing blow to the latter.
In the past decade of development in China's home appliance industry, it has been such a development path of reducing costs and cracking down.
In recent years, the overseas revenue share of several major home appliance giants, including Haier Smart Home, Midea, and Gree, has also been continuously increasing. In addition, various home appliance companies such as Hisense and TCL have also performed well. However, in the journey of major brands going global, they have different styles.
02
Each showcases their divine abilities.
In the new era of "great navigation", Chinese enterprises have already entered the fast lane of going global. On the way forward, different enterprises have chosen different paths.
Haier Zhijia's overseas trips are quite representative. In the impression of most people, Haier started with refrigerators and washing machines in China. In February 1997, Haier participated in the World Home Appliance Expo held in Germany and issued its first overseas distribution certificate to foreign investors, marking Haier's official entry into overseas markets.
Two years later, Haier invested in building a factory in the United States; In 2000, Haier established the Brugilio R&D Center in Italy; Since 2005, Haier has entered the stage of "global brand strategy", gradually shifting its focus to localizing overseas markets.
For example, in developed countries such as Europe and America, Haier has further expanded its overseas market by acquiring local brands and leveraging the brand acquisition team and existing market experience. In 2011, Haier acquired Sanyo Electric and expanded its white power business in Japan and Southeast Asia; In 2012, it controlled Fisher&PayPal to expand its presence in the Australian and New Zealand markets; In 2016, GE acquired General Electric's home appliance business and expanded its presence in the North American market; In 2019, it acquired the Italian brand Candy and entered the European market.
Driven by both its own brand and high-quality overseas brands, Haier has quickly formed a global strategic layout of multiple brands and full categories. Financial report data shows that in 2022, Haier Smart Home's global operating revenue reached 243.514 billion yuan, a year-on-year increase of 7.2%. Among them, overseas home appliances and smart home businesses achieved revenue of 125.424 billion yuan, a growth of 10.3% against the trend.
It is worth mentioning that against the backdrop of an overall increase of -6% in core home appliance shipments in the American market, Haier Smart Home's revenue increased by 9%; Against the backdrop of industry sales growth of -8.9% in the European market, Haier Smart Home's revenue increased by 16.7%.
Hisense is another company that regards going abroad as its strategic goal. Since 2006, Hisense has been committed to building research and development centers and manufacturing factories overseas, with the strategic goal of focusing its business overseas.
Public information shows that Hisense has established research and development centers and factories in Europe, Australia, the United States, and other places, expanding its channels, and gradually completing localized operations. Hisense TV and refrigerator categories have already occupied the top three or even top positions in markets such as South Africa, Japan, Australia, and Mexico. As of now, Hisense has formed a global business map with 16 industrial parks, 16 research and development centers, covering more than 160 countries and regions.
In addition, another obvious feature of Hisense's overseas expansion is its transformation from home appliances to technology enterprises in the B2B industry, such as further expanding its layout in precision medicine, intelligent transportation, smart cities, optical communication and other fields. At present, Hisense is assisting Ethiopia in building intelligent public transportation projects; Hisense Ultrasound has entered 11 overseas countries, including South Africa, the United Arab Emirates, and Germany; In June this year, on the occasion of the second anniversary of Hisense's acquisition of Japanese automotive air conditioning supplier Mitsubishi Electric Holdings, the group explicitly designated automotive electronics as one of the second growth curves.
TCL is well-known among Chinese people as a television and mobile phone, but in fact, it has explored everything from semiconductor chips to panel research and development. In terms of choosing the path to go abroad, TCL has chosen a strategy of advancing alongside emerging markets and developing country markets. However, its export also comes with prints and thorns.
In 2001, TCL hired South Korean celebrity Kim Hee sun as the spokesperson for its mobile phone image at exorbitant advertising fees, successfully entering markets such as Vietnam and Bandit. In 2006, TCL initiated a transformation, and Multimedia Europe terminated its sales and marketing activities except for OEM business, selling off non main businesses such as international electrical engineering and intelligent building business to recover cash flow.
At the same time, TCL has anchored its technology priority route in China and invested 20 billion yuan to build TCL Huaxing. As of now, TCL Huaxing's product line has covered large-sized TV panels and small-sized mobile terminal panels. Since 2015, TCL has entered a period of rapid development, basically establishing a foothold in the European market and expanding to the United States, where it has achieved the second largest market share.
According to public information, as of the end of 2022, TCL has achieved many accomplishments in the entire semiconductor chip industry chain, including leading the improvement of multiple industry standards and ranking among the top in the number of patents.
It can be seen that TCL Huaxing has completed the transformation towards deeper technological fields based on television, setting a development benchmark for the entire domestic consumer electronics brand to go global.
As one of the samples of Chinese enterprises going abroad, TCL has completed the industrial chain layout from "world factories to world factory construction", transitioning from localization to globalization, forming a localized layout of the entire industrial chain from research and development, production, marketing to service. As of now, TCL has established 48 research and development centers, 32 manufacturing bases, and sales agencies in over 80 countries and regions worldwide, with a business scope exceeding 160 countries and regions.
TCL founder and chairman Li Dongsheng proposed at the 2023 Summer Davos Forum that Chinese manufacturing should take globalization as a strategic development direction, shift from exporting products to developing industrial capabilities, and help Asian manufacturing continuously improve its industrial system, maintaining leading advantages in quality, efficiency, cost, and other aspects.
And this may become a new trend for Chinese home appliance brands to go global.
Conclusion.
From crossing the river by feeling the stones in the early days to now leading the world, the results of Chinese home appliance brands going global may seem very promising, but there are actually many twists and turns in the process. It took Midea ten years to build a factory in Vietnam and achieve profitability; TCL's setbacks in Europe, if not adjusted in a timely manner later, are likely to result in no current performance.
But as a traditional export category, home appliance products always maintain sufficient resilience, so that Chinese home appliance brands truly stand among the world's brands.
The image is sourced from public networks and has been hacked or deleted.
