Small Electrical Appliances Outselling Large Counterparts in China Market
Jan 22, 2004
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A survey conducted by the National Bureau of Statistics indicates the potential market for small electrical appliances will be worth about 350 billion yuan (U.S. $42 billion) during the next decade.
As demand for small electrical appliances is expected to increase more than 30 percent annually throughout the next 10 years, analysts widely consider the next two or three years as a golden period for the development of China's small electrical appliances.
It appears small electrical appliances, which have traditionally sold well in China, are still popular.
Consumers' demands for small electrical appliances continue to increase, as people's living standards continue to improve.
As a result, several factories that manufactured large electrical appliances have begun producing small electrical appliances.
Between January and November in 2003, the production volumes of microwave ovens, electric cookers, grease pumps, water heaters, vacuum cleaners, dishwashers, and electric heaters surpassed those from the previous year by 49.9 percent, 44.5 percent, 13.6 percent, 33.9 percent, 36 percent, 150 percent, and 57 percent, respectively.
Small electrical appliances, in contrast with large electrical appliances, despite having lower per-unit costs, have greater profit margins.
Small electrical appliances sold in China generate gross profits in excess of 30 percent; larger electrical appliances, less than 5 percent.
Foreign companies have rushed to get their small electrical appliances into China's market since 2001, when China joined the World Trade Organization (WTO).
Statistics indicate there are nearly 200 kinds of small electrical appliances in developed countries, and that each family owns between 30 and 40 of these household goods.
In China, however, there are fewer than 100 types of small electrical appliances, and each family owns just a few of these items.
This indicates there is great potential for the market to grow.
Small electrical appliances generally have a lifespan of about 6 years.
That means most of the small electrical appliances will have to be replaced in the near future, which will result in a purchasing frenzy.
In terms of the market, the situation in China this year will show that in large, provincial-level cities, people are most interested in brand-name small electrical appliances.
Due to their advanced technologies, international brands—such as Philips of The Netherlands, Panasonic of Japan, and Braun of Germany—are dominant, even though they sometimes cost three times more than domestic brands.
Fewer domestic brands that copy famous international products are entering the local market. Previously, more than 20 such items entered the market annually. That figure has fallen to seven.
Also, due to the enormous market potential, many of China's manufacturers of large electrical appliances have begun making small electrical appliances.
Consumption of domestically made small electrical appliances has grown rapidly.
As a result, production of water coolers, household dishwashers, and household sterilizers have soared more than 40 percent annually in the past few years.
But imported small electrical appliances are more popular.
Philips, Panasonic, and Braun have solidified their foothold in China due largely to their advanced technologies and their products' attractive appearance.
There is tremendous need in western China for small electrical appliances, and that need is growing. Those markets could be exploited.
Statistics indicate nearly 37 percent of the small electrical appliances in western China were purchased between 5 and 8 years ago. New products—such as water coolers, microwaves, DVD players, and sterilizers—are desired by most families.
Statistics indicate more than 25 percent of Chinese families plan to purchase such products this year. (Business Weekly)
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