Fridges have always been something of a status symbol, but to stand out from the crowd these days you have to have one with a range of increasingly smart and snazzy functions. High-end fridges have become an important area of growth, although there are signs of a cooling down in the overall fridge market.
Last week, Siemens launched a new three-door model for the Chinese market as part of the German brand's ambition to further tap into the China's high-end market.
Sales of the fridge, which costs around 8,500 yuan ($1,311), are expected to total around 50,000 units over the next year. Demand for high-end models will see continued growth in China in the future, as improving living conditions enable more people to buy high-end products, Roland Gerke, president and CEO of BSH Home Appliances (China) Co based in Nanjing, East China's Jiangsu Province, said in an interview Wednesday.
Bosch and Siemens Home Appliances Ltd (BSH) is a 50-50 joint venture between Bosch and Siemens.
BSH announced in late February its plan to set up a second refrigerator manufacturing base in Chuzhou, East China's Anhui Province, with investment of 90 million euros ($130 million). The new plant, with production scheduled to begin in 2013, is designed for an annual output capacity of more than 5 million units, consisting mainly of high-end products, including side-by-side and three-door models.
The company also unveiled a new development center in Nanjing at the end of February to strengthen its R&D of premium fridge products.
Growth bonanza
"China's fridge market has been growing extremely fast in the past two years thanks to government policy support," Cai Ling, client service manager with consumer market research firm GfK Retail and Technology China Co in Beijing, told the Global Times.
Sales of refrigerators increased by 36 percent to 31.5 million units in 2010 from a year earlier, following 38 percent growth in sales in 2009, according to GfK.
Sales of high-end fridges have contributed significantly to total sales growth, Cai said.
BSH's fridge sales in China rose by 25 percent last year, with high-end fridge products representing 40 percent of the total sales, Gerke said in late February when announcing the new manufacturing plant in Chuzhou.
The trend will continue, and high-end products including side-by-side and three-door models will become the driving force, Cai believes.
High-end fridge sales as a percentage of total fridge sales in the nation are expected to reach 25 percent this year from 16 percent last year, according to GfK.
Over the medium term to long term, there will be continued growth, as the country's 12th Five-Year Plan (2011-15) highlights boosting domestic demand as one of the important targets to be fulfilled.
Furthermore, China's ongoing urbanization will guarantee a continued increase in city populations at least for the next 10 to 15 years.
"These are fundamental factors that drive demand," Gerke said, adding that improving living conditions, particularly in third-tier and fourth-tier cities, will generate demand for quality goods.
Cooling down?
Although high-end fridges will remain a driving force for future growth, Cai pointed out that "fridge growth will not reach the same high growth rate as previous years owing to government control of the overheated economy."
There was rapid growth in fridge sales last year, thanks to the government's favorable policies, but sales growth is already seeing signs of a slowdown, Cai Ying, associate director of the resources information development department with the State Information Center, said in late May when releasing a white paper on China's fridge market. The center is a think tank under the nation's top economic planner, the National Development and Reform Commission.
Sales of fridges in more than 300 cities nationwide grew by 28.95 percent to 23 million units in 2010, while in the first quarter of this year, fridge sales climbed by 8.24 percent, according to the white paper.
"The government's policies have pushed some buyers to advance their purchase plans, which will affect sales growth this year, but the slowdown in fridge sales growth is mainly due to a high base last year," Xu Dongsheng, secretary general of China Household Electrical Appliances Association, told the Global Times.
"The first three months of this year are meeting high figures from last year, so maybe the increase is not so much," Gerke of BSH also said. "The whole growth may be less than last year, but there will be growth," he added.
Fridge sales growth will shrink to 5 percent this year, compared to more than 35 percent over the past two years, GfK's Cai estimated.
Overabundance fears
A slowdown in growth of the nation's fridge market has stirred worries over potential overcapacity in the industry.
The fast-growing fridge market has not only attracted fridge makers like BSH to boost production capacity, but also lured manufactures in other fields of home appliances to move into the market.
Fridge makers such as Haier and Meiling have recently announced plans to boost their fridge output capacity, while companies like Sanyo and Skyworth have also recently unveiled plans to make a foray into the fridge market.
Manufacturers should be more cautious about expansion in the future, GfK's Cai said, as domestic demand is not expected to grow as fast as in previous years and it will increasingly come from high-end fridge products.
"If (manufacturers are) relying only on the domestic market, over-expansion will lead to severe competition in the future," he added.
The fridge market will be facing consolidation, as rising raw material prices as well as restrictions on bank loans will put a lot of pressure on smaller companies, Gerke said.
Last week, Siemens launched a new three-door model for the Chinese market as part of the German brand's ambition to further tap into the China's high-end market.
Sales of the fridge, which costs around 8,500 yuan ($1,311), are expected to total around 50,000 units over the next year. Demand for high-end models will see continued growth in China in the future, as improving living conditions enable more people to buy high-end products, Roland Gerke, president and CEO of BSH Home Appliances (China) Co based in Nanjing, East China's Jiangsu Province, said in an interview Wednesday.
Bosch and Siemens Home Appliances Ltd (BSH) is a 50-50 joint venture between Bosch and Siemens.
BSH announced in late February its plan to set up a second refrigerator manufacturing base in Chuzhou, East China's Anhui Province, with investment of 90 million euros ($130 million). The new plant, with production scheduled to begin in 2013, is designed for an annual output capacity of more than 5 million units, consisting mainly of high-end products, including side-by-side and three-door models.
The company also unveiled a new development center in Nanjing at the end of February to strengthen its R&D of premium fridge products.
Growth bonanza
"China's fridge market has been growing extremely fast in the past two years thanks to government policy support," Cai Ling, client service manager with consumer market research firm GfK Retail and Technology China Co in Beijing, told the Global Times.
Sales of refrigerators increased by 36 percent to 31.5 million units in 2010 from a year earlier, following 38 percent growth in sales in 2009, according to GfK.
Sales of high-end fridges have contributed significantly to total sales growth, Cai said.
BSH's fridge sales in China rose by 25 percent last year, with high-end fridge products representing 40 percent of the total sales, Gerke said in late February when announcing the new manufacturing plant in Chuzhou.
The trend will continue, and high-end products including side-by-side and three-door models will become the driving force, Cai believes.
High-end fridge sales as a percentage of total fridge sales in the nation are expected to reach 25 percent this year from 16 percent last year, according to GfK.
Over the medium term to long term, there will be continued growth, as the country's 12th Five-Year Plan (2011-15) highlights boosting domestic demand as one of the important targets to be fulfilled.
Furthermore, China's ongoing urbanization will guarantee a continued increase in city populations at least for the next 10 to 15 years.
"These are fundamental factors that drive demand," Gerke said, adding that improving living conditions, particularly in third-tier and fourth-tier cities, will generate demand for quality goods.
Cooling down?
Although high-end fridges will remain a driving force for future growth, Cai pointed out that "fridge growth will not reach the same high growth rate as previous years owing to government control of the overheated economy."
There was rapid growth in fridge sales last year, thanks to the government's favorable policies, but sales growth is already seeing signs of a slowdown, Cai Ying, associate director of the resources information development department with the State Information Center, said in late May when releasing a white paper on China's fridge market. The center is a think tank under the nation's top economic planner, the National Development and Reform Commission.
Sales of fridges in more than 300 cities nationwide grew by 28.95 percent to 23 million units in 2010, while in the first quarter of this year, fridge sales climbed by 8.24 percent, according to the white paper.
"The government's policies have pushed some buyers to advance their purchase plans, which will affect sales growth this year, but the slowdown in fridge sales growth is mainly due to a high base last year," Xu Dongsheng, secretary general of China Household Electrical Appliances Association, told the Global Times.
"The first three months of this year are meeting high figures from last year, so maybe the increase is not so much," Gerke of BSH also said. "The whole growth may be less than last year, but there will be growth," he added.
Fridge sales growth will shrink to 5 percent this year, compared to more than 35 percent over the past two years, GfK's Cai estimated.
Overabundance fears
A slowdown in growth of the nation's fridge market has stirred worries over potential overcapacity in the industry.
The fast-growing fridge market has not only attracted fridge makers like BSH to boost production capacity, but also lured manufactures in other fields of home appliances to move into the market.
Fridge makers such as Haier and Meiling have recently announced plans to boost their fridge output capacity, while companies like Sanyo and Skyworth have also recently unveiled plans to make a foray into the fridge market.
Manufacturers should be more cautious about expansion in the future, GfK's Cai said, as domestic demand is not expected to grow as fast as in previous years and it will increasingly come from high-end fridge products.
"If (manufacturers are) relying only on the domestic market, over-expansion will lead to severe competition in the future," he added.
The fridge market will be facing consolidation, as rising raw material prices as well as restrictions on bank loans will put a lot of pressure on smaller companies, Gerke said.
