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issue: April 2003 Whirlpool Special Section

Whirlpool Special Section
Whirlpool in Asia

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With Chinese players beginning to weaken in the domestic Chinese market, and multinational players beginning to gather strength, the Chinese appliance market is gearing up for a fresh battle. Whirlpool Corporation plans to be in the thick of it all and targets Asia as a key strategic interest for its long-term success.

Garrick D'Silva, head of Asia Operations for Whirlpool Corporation

The Asian appliance market is one of the fastest growing markets in the world. This year alone, an estimated 100 million appliances will be made and sold in Asia, eclipsing the European market, which is about 80 million, and the North American market, at 35 million. Not surprisingly, Whirlpool Corporation is keen on becoming one of the key players in the region. Currently, Asia contributes 6 percent to Whirlpool's global revenues. But this is poised to grow significantly. Says Garrick D'Silva, head of Asia Operations for Whirlpool Corporation, "We are the smallest and the youngest. The reality is that Asia has emerged as the most important region. By virtue of that fact, Asia will get a high degree of interest strategically."

Growing volumes in the Asian market is not going to be easy, though. The competition is intense, and this has led to a slowdown of growth in volume terms. The biggest challenge that appliance makers face in Asia today is the proliferation of low-cost products being manufactured in countries like China and Korea. As a result, pressure is placed on value growth as well. Mr. D'Silva says, "For the first time, we are seeing a noticeable price decline in markets such as Hong Kong and Australia." The companies that are indulging in price-led strategies are the Korean companies, mainly LG and Samsung, and Haier, the Chinese manufacturer.

In such a scenario, says Mr. D'Silva, "Whirlpool has grown nicely - approximately above 10 percent in unit terms and 5 percent in revenues." Attributing this growth to the restructuring of Whirlpool's Asian operations, Mr. D'Silva says, "We have reorganized ourselves into five geographic groups with the purpose of getting closer to consumers and the trade, and leveraging synergies. And that's paid dividends. We have improved our profitability last year and driven quite a bit of productivity."

The Chinese appliance market, which is one of the most significant markets in Asia, has been growing rapidly for the past 5 years. But growth has slowed there as well. This is largely due to the Chinese government's policy of calling in the coupons that it gives to its citizens to purchase durables. As a result, there has been an overall decline in appliance purchases.

In China, Whirlpool brand is present in two categories - fully automatic washers and microwave ovens. In the washing machine category, the company has grown by 30 percent over last year. In the microwave oven category, the growth has been 100 percent. "We have predominantly taken market share from Chinese players," says Mr. D'Silva.

The Whirlpool brand washer facility is located in Shanghai, where both top-loading and front-loading washers are manufactured. Mr. D'Silva comments, "We produced more than 300,000 units last year, and we are growing by 30-40 percent every year."

With an expanding laundry portfolio, Whirlpool Corporation is targeting the domestic Chinese market as well as developing high-end, top-loading washers with more features and bigger capacity models for Hong Kong, South East Asia, and Australia.

The company's other large factory is in Guandong province in southern China, and a majority of production that is meant for exports to North America, Europe, and other Asian markets.

Exports are a major feature of appliance manufacturing in China. This alone is driving product growth, according to Mr. D'Silva. "We plan to shift our manufacturing facility for microwave ovens from Europe into our Shenzhen facility," he says. "We have relocated our research and development and design capabilities here. This is being done largely for cost productivity and because there is access to good technology."

APPLIANCE Magazine Whirlpool Special Section - April 2003



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