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Electrical Appliances
Sector China
March 2014
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Table of Contents
I. Sector Overview
1. Sector Highlights
2. Economic Importance
3. Revenues & Profit
4. Sector Forecast
5. Sector Costs Overview
6. Output & Sales Value
7. Foreign Trade
8. Household Appliances Market Segmentation
9. Employment
10.Prices
11.Raw Materials Prices
12.Government Policy
II. Product Subsectors
1. Industrial Production
2. Exports
3. Penetration
4. Air Conditioners
1. Refrigeration Appliances
2. Kitchen Appliances
3. Cleaning Electrical Appliances
4. Ventilation & Beauty Electrical Appliances
5. Other Electrical Appliances
III. Main Players
1. Gree Electric Appliances, Inc.
2. Gree Electric Appliances, Inc. (cont’d)
3. Haier Group
4. Haier Group (cont'd)
5. TCL Corporation
6. TCL Corporation (cont'd)
7. Midea Group
8. Midea Group (cont'd)
9. GOME Electrical Appliances Holding Ltd.
10.GOME Electrical Appliances Holding Ltd. (cont'd)
11.GOME Electrical Appliances Holding Ltd. (cont'd)
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I. Sector Overview
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Sector Highlights
The electrical appliances industry in China has continued its steady growth, underpinned by the ongoing urbanisation and rising purchasing power of consumers in low-tier cities and rural areas. China is the world leader in both the production and consumption of electrical appliances, as the country's appliance manufacturers have been dominating the global market for over a decade, and the future for the sector over the next few years looks promising.
Development
While regionally separated, new demand and replacement demand in the sector remain strong. Replacement demand is the major
driver in mature markets in major cities across the country, while in poorer regions, especially in the central and western parts of
China, penetration remains generally low and demand for new appliances remains steady.
A number of subsidy programs for electrical appliances ended in 2013, which has somewhat dampened the purchasing drive of
consumers and to some extent affected the overall market, especially in the second half of the year. However, the industry appears to
be quickly recovering from the slowdown and the dominant sentiment on the market is one of optimism.
Local players dominate in the Chinese market, with some of the main companies also being among the world's leading appliance
manufacturers. Such big players are seen as mostly targeting the mid- to high segment where - in order to accommodate the solid
demand for product upgrades - new launches take place often and marketing campaigns are aggressive.
Online sales of household electrical appliances are gaining speed as delivery areas are widening, payment conditions are gaining
attractiveness and the quality of after-sale services is rising. In the meantime, high-end customers are displaying an increasing interest
in smart appliances such as refrigerators and washing machines which have only recently been introduced in China.
Demand
Subsidies
Competition
Technologies
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Source:
Economic Importance
Economic Importance
National Bureau of Statistics
2009 2010 2011 2012 2013
GDP, RMB tn 34.1 40.0 47.0 52.0 56.9
Revenues, RMB bn 714.9 927.8 1,086.8 1,128.6 1,284.3
Revenues as share of GDP 2.1% 2.3% 2.3% 2.2% 2.3%
Total assets (at year end), RMB bn 468.1 614.8 720.7 775.1 897.6
Current assets (at year end), RMB bn 310.4 430.3 508.0 531.4 615.1
Accounts receivable (at year end), RMB bn 75.5 95.6 101.6 114.9 132.2
Total liabilities (at year end), RMB bn 297.4 405.2 474.6 498.0 574.4
Product Inventories (at year end), RMB bn 34.8 49.9 52.2 58.3 68.9
No of employees (average, thou) 1,097.1 1,288.4 1,373.0 1,331.8 n/a
No of enterprises (at year end) 3,180 3,267 2,463 2,531 2,586
No of loss making enterprises (at year end) 424 340 270 310 355
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Comments
Source:
Revenues & Profit
In spite of some slowdown taking place after subsidies being withdrawn by the government, 2013 has still managed to top the industry
performance from 2012 convincingly and the sector appears to have overcome the slowdown in growth following the global crisis.
Disparity in profit distribution remains in place as major players enjoy much higher margins while smaller companies are under pressure and
most of them are experiencing near-zero or single-digit growth.
Revenues Profit, RMB bn
National Bureau of Statistics
715
928
1,087 1,129
1,284
5.6%
29.8%
17.1%
3.8%
13.8%
2009 2010 2011 2012 2013
Sales revenues, RMB bn Annual growth
38.7
58.1 60.4
66.9
78.4
2009 2010 2011 2012 2013
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Source:
Comments
Sector Forecast
The industry potential for future growth remains high as internal demand, accelerating construction of affordable houses and product
innovations, coupled with a recovery in global spending, will continue to drive the market forward. A CAGR of 9.9% is expected over the
forecast period. Meanwhile, in the mid-term, researchers from CEInet expect each of refrigerators, air-conditioners and washing machines to
retain an annual growth rate of between 4% and 11% by 2015.
Household Appliances Market Value
Marketline
11.8% 9.7% 9.4% 9.3% 9.1%
0
20
40
60
80
100
120
140
2013 2014 2015 2016 2017
Household appliances market value, USD bn Annual growth
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Source:
Sector Costs Overview
Cost of Sales Other Costs
National Bureau of Statistics
2009 2010 2011 2012 2013
Total taxes paid, RMB bn n/a 28.8 32.1 29.3 39.3
Sales taxes and surcharges, RMB bn 4.1 4.3 3.9 5.2 6.2
Selling and distribution costs, RMB bn 46.4 63.4 65.9 72.3 87.9
Administration expenses, RMB bn 32.9 40.7 45.6 47.9 53.1
Financial expenses, RMB bn 4.3 4.7 6.2 5.4 5.8
595
783
919 933
1,066
6.5%
7.4%
6.6%
7.2%
7.4%
2009 2010 2011 2012 2013
Cost of sales, RMB bn Profit to cost ratio
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Source:
Output & Sales Value
Gross Industrial Output Industry Sales Value
National Bureau of Statistics
597
692
739
952
1,105
24.7%
15.9%
6.8%
28.9%
16.1%
2007 2008 2009 2010 2011
Gross industrial output, RMB bn Growth, y/y
683 703
912
1,077 1,105
230 205 262
296 295
17.4%
2.9%
29.8%
18.1%
2.6%
2008 2009 2010 2011 2012
Industrial sales value, RMB bn
Industrial sales, delivery value for exports, RMB bn
Industrial sales value, annual growth
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Comments
Source:
Foreign Trade
Following a slowdown in export growth between 2010 and 2012, in the first three quarters of 2013 the trend has reversed due to adjustments
of the export structure made by Chinese manufacturers as well as the recovery in major export markets such as the United States and
Europe. Demand from emerging markets is also looking promising.
Exports Imports
Ministry of Commerce, CHEAA
31.3
40.0
47.2 50.3
42.1
-13.3%
28.1%
18.0%
6.5% 8.7%
2009 2010 2011 2012 2013 Jan-Sep
Exports, RMB bn Annual change
2.8 2.9
3.2 3.1
2.4
-12.1%
3.9%
9.0%
-3.4%
0.0%
2009 2010 2011 2012 2013 Jan-Sep
Imports, RMB bn Annual change
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Source:
Household Appliances Market Segmentation
Asia Pacific Market Segmentation (2012)
Distribution Channel Segmentation (2012)
Market Segmentation by Product Type (2012)
Marketline
Electricals & electronics
retailers 47.1%
Department stores 31.1%
Hypermarket, supermarket &
discounters 4.8% Discount,
variety & general
merchandise 1.0%
Others 16.0%
China 61.2%
Japan 17.9%
South Korea 5.3%
India 2.7%
Rest of Asia-Pacific 12.9%
Major domestic
appliances 89.6%
Minor domestic
appliances 10.4%
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Source:
Employment
Number of Employees Biggest Employers (2013)
MIIT, Fortune China
Employer Number of Employees
Gree Electric Appliances, Inc. 72,671
Midea Holding Co., Ltd. 66,497
Changhong Electric Co.,Ltd. 60,398
Haier Co.,Ltd. 59,814
GOME Electrical Appliances Holding Ltd. 59,624
TCL Corporation 56,190
1,093 1,097
1,288
1,373 1,332 0.14% 0.14%
0.17%
0.18%
0.17%
2008 2009 2010 2011 2012
Sector employees, th Share of total workforce, %
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Source:
Comments
Prices
Prices have largely remained stable over the past few years and much of this is due to the raw material prices staying at a relatively low level.
For an extended period, price has been the leading factor for Chinese consumers. However, at present prices are starting to lose their role in
consumers' decisions at the expense of exterior design, features and functionalities of the product and branding, as well as the environmental
friendliness of the purchased appliances.
House Appliance Prices, 36 Cities Average, RMB
Price Monitoring Center, NDRC
3,043 3,113 3,108 3,203 3,152 3,191 3,234
3,547 3,434
3,541 3,498 3,583 3,562 3,536 3,545 3,210 3,215 3,274 3,246 3,135
3,068 3,088
3,137
2,870 3,090 3,136 3,128 3,213 3,187 3,182
1,797 1,816 1,778 1,780 1,731 1,732 1,699 1,651 1,469
1,681 1,752 1,760 1,693 1,729 1,727
586 562 576 573 568 574 571 730 721 735 743 751 751 751 780
3,075 3,056 3,000 3,072 3,038 3,081 3,085
2,756 2,680 2,724 2,647 2,728 2,758 2,752 2,730
Jun 2010 Sep 2010 Dec 2010 Mar 2011 Jun 2011 Sep 2011 Dec 2011 Mar 2012 Jun 2012 Sep 2012 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Dec 2013
Air Conditioner, 1.5P Refrigerator, 210-250L Electric water heater, 50l Microwave oven, 700w Roller washing machine, 5kg
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Source:
Raw Materials Prices
Copper
Aluminum
Indexmundi
6,000
6,500
7,000
7,500
8,000
8,500
9,000
Feb2012
Mar2012
Apr2012
May2012
Jun2012
Jul2012
Aug2012
Sep2012
Oct2012
Nov2012
Dec2012
Jan2013
Feb2013
Mar2013
Apr2013
May2013
Jun2013
Jul2013
Aug2013
Sep2013
Oct2013
Nov2013
Dec2013
Copper, grade A cathode, LME spot price, CIF European ports, USDollars/metric ton
1,600
1,800
2,000
2,200
2,400
Feb2012
Mar2012
Apr2012
May2012
Jun2012
Jul2012
Aug2012
Sep2012
Oct2012
Nov2012
Dec2012
Jan2013
Feb2013
Mar2013
Apr2013
May2013
Jun2013
Jul2013
Aug2013
Sep2013
Oct2013
Nov2013
Dec2013
Jan2014
Aluminum, 99.5% minimum purity, LME spot price, CIF UK ports, USD/metric ton
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Government Policy
Five-year
Plan
According to the central government’s 12th Five-year Plan (2011-2015), the output value of the industry is planned to reach
RMB 1.5 trillion by the end of 2015, implying an average annual growth of 9.2%. Appliance exports are to grow by 8.4%
annually during the period to USD 60bn annually and account for 35% of the global market. The plan urges technical
innovations to shore up the quality of Chinese-made appliances and preferential treatment from government policies to
back the growth of the industry. Besides, the plan also envisages the construction of 36 million so called "social houses" for
low-income families. According to regulations, such homes must be provided with a full set of kitchen and bathroom
appliances.
End of
Subsidies
Subsidies for five categories of energy-saving household electrical appliances, including air conditioners, flat-panel television sets, refrigerators, washing machines and hot water heaters, ended in June 2013, after being in place for a period of one year . According to the program, consumers could be subsidised by RMB 70 to 550. The effects have been notable: market shares of energy-efficient air conditioners and washing machines have increased, with sales of such appliances rising from 1.6mn units in June 2012 to an average of about 7mn in the first five months of 2013. The major long-lasting effect is to be the increased consumer awareness of the benefits of eco-friendly products.
Ministry of Commerce representatives have stated that no similar subsidies are planned for the near future. Another subsidy policy, "Household appliances go rural", ended in January 2013 after a five year run.
New Air
Conditioner
Standard
In September 2013, China introduced GB21455:2013, a new standard for inverter air conditioners which is expected to
raise requirements on energy-saving performance of inverter air conditioners and eventually boost their popularity among
consumers. China has planned to increase the energy efficiency of inverter air conditioners by 20% over the current
planning period which ends in 2015.
China Daily, Xinhua
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II. Product Subsectors
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Source:
Industrial Production
Industrial Production by Subsector, units th
National Bureau of Statistics
Appliance 2009 2010 2011 2012 2013
Air conditioner 81,533 112,198 139,125 132,811 143,329
Household refrigerator 60,636 75,462 86,992 84,270 93,406
Freezer 12,580 17,099 18,728 19,075 20,847
Household washing machine 49,358 62,080 66,712 67,415 72,019
Vacuum cleaners 56,694 75,965 83,169 80,665 84,779
Household electric water heater 19,892 18,915 24,419 24,240 33,686
Microwave oven 60,382 67,817 66,921 69,994 70,847
Electric cooker 149,569 170,862 183,294 184,048 214,834
Household electrothermal baking apparatus 149,329 170,269 157,298 188,561 187,029
Household electric fan 143,653 161,346 174,295 148,136 139,083
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Source:
Exports
Air Conditioners Refrigerators
General Administration of Customs
5,136
7,816
9,747 9,873 10,278
28.1
42.7
44.8 43.8
44.6
2009 2010 2011 2012 2013
Exports, USD mn Exports, units mn
3,001
3,805
4,365
4,779
5,045
23.6
30.8
32.7 33.2
35.5
2009 2010 2011 2012 2013
Exports, USD mn Exports, units mn
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Source:
Exports (cont'd)
Washing Machines
Microwave Ovens
Electric Fans
General Administration of Customs
2,404
2,994
3,562 3,697
4,165
404.7
520.7
547.0 535.5
561.4
2009 2010 2011 2012 2013
Exports, USD mn Exports, units mn
1,859 2,203
2,549 2,592 2,608 44.9
53.1 53.9 53.8 54.3
2009 2010 2011 2012 2013
Exports, USD mn Exports, units mn
1,736
2,328
2,802 3,323 3,433
13.9
17.9
21.1 22.8
21.3
2009 2010 2011 2012 2013
Exports, USD mn Exports, units mn
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Comments
Penetration
The penetration rate of electrical appliances in China is notably lower than the average in developed countries, which implies a significant
future growth potential. One somewhat extreme example is the dish washing machine segment where the penetration rate of 60-70% in
developed countries compares to less than 1% in China.
Ownership of Electrical Appliances Per 100 Urban Households at Year-end by Level of Income (2012)
National Bureau of Statistics
Appliance Average
Lowest
Income
households
Poor
households
Low
income
households
Lower
middle
income
households
Middle
income
households
Upper
middle
income
households
High
income
households
Highest
income
households
Washing Machine 98.0 90.0 87.4 94.7 97.3 98.8 99.8 101.0 103.6
Refrigerator 98.5 83.3 79.2 92.8 97.2 99.9 102.1 104.2 107.9
Microwave Oven 62.2 30.1 24.0 43.7 54.2 65.1 74.1 80.6 86.3
Air Conditioner 126.8 52.5 42.0 77.1 98.9 124.6 151.1 181.1 223.6
Boiler 91.0 65.8 59.6 78.7 87.1 92.9 98.1 103.0 109.8
Disinfection Cupboard 19.5 8.4 6.5 12.3 14.2 17.8 22.8 29.9 37.7
Dishwasher 0.9 0.3 0.2 0.4 0.5 0.7 1.1 1.5 2.1
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Air Conditioners
Revenues & Profit
The air conditioners segment remains in a stage of
adjustment which is likely to resume into the
upcoming quarters.
Some support for the segment has come from the
hottest summers on record in China in the last
couple of years, especially in many places in the
southern part of the country.
In 2013, the sales volumes in major cities have
reversed the trend and are back on the rise.
The proportion of inverter air conditioners has
reached 51.6% of total sales volume in 2013, up
from 47.3% in the previous year. This is seen as a
sign that customers are now increasingly turning
their preference toward high-end products and are
more willing to pay the respective higher prices for
them.
With the aggravating situation with air quality across
the country and especially in industrial cities,
demand for air purifiers is rising among urban
households.
AirCon market shares in 35 major cities (2013)
National Bureau of Statistics, Sinomonitor
231.7
314.3
403.3 407.5
465.8
12.8 20.6 23.2 27.1 35.9
252
273
236 239
242
210
220
230
240
250
260
270
280
0
100
200
300
400
500
2009 2010 2011 2012 2013
Sales revenues Total profit, RMB bn No of enterprises
Gree 25.2%
Haier 10.9%
Midea 9.3%
Changhong 6.3%
AUX 5.5%
Galanz 5.1% Chunlan 4.2%
Others 33.5%
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Refrigeration Appliances
Revenues & Profit
The country's refrigerator market is dominated by
local brands, with Haier consolidating its leading
position in 2013.
In the more mature markets in larger cities, the main
factors consumers consider before purchasing
refrigerators are brand, performance, quality and
eco-friendliness.
Recently, one of the main key growth drivers in the
sector has been the demand for high-end and low
energy products. On the other hand, some traditional
segments are approaching saturation levels and
deliver a diminishing contribution.
While subsidies for energy saving products have
already expired, the subsidy program has helped
raise general awareness about the benefits of such
products and is seen as having long-lasting impact
on consumer demand.
Refrigerator market shares in 35 major cities (2013)
National Bureau of Statistics, Sinomonitor
175.3
224.6 254.8
276.1
317.4
8.7 14.4 13.4 16.1 17.8
280
291
248
255
267
2009 2010 2011 2012 2013
Sales revenues Total profit, RMB bn No of enterprises
Haier 25.0%
Midea 8.2%
Ronshen 5.6%
Toshiba 5.0%
Siemens 4.7%
Aucma 4.3%
Changling 4.2%
Othes 43.0%
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Source:
Kitchen Appliances
Revenues & Profit
The mainland’s kitchen appliance market is mainly
supported by urban households with stronger
purchasing power. Urban residents started buying
kitchen appliances in the 1990s. With an assumed
lifespan of kitchen appliances of 10-15 years, kitchen
appliances of urban consumers have now entered
the replacement period and this has been driving
demand in the segment.
According to Euromonitor, among cooking
appliances, built-in large cooking appliances have
become the most desirable and account for some
70% of the total market for large cooking appliances.
In the microwave ovens segment, computerised
products have accounted for the majority of sales
volumes for 2013.
Competition in the mainland kitchen appliance
market has escalated from price war to technology
war, with the focus of competition shifting towards
the medium- to high-end market. In order to make
breakthroughs, many manufacturers on the mainland
have devoted a lot of efforts to R&D, and are
designing products of different models and functions
to meet consumers’ cooking habits and household
conditions.
Microwave ovens market shares in 35 major cities (2013)
National Bureau of Statistics, CMRC, HKTDC
115.2
143.7 145.0 141.1 165.4
5.7 7.4 8.2 7.5 7.5
840 842
610 652 651
2009 2010 2011 2012 2013
Sales revenues Total profit, RMB bn No of enterprises
Galanz 31.1%
Midea 16.3%
Haier 6.9%
Whirlpool 4.6%
Aucma 4.2% Panasonic
3.3% Kelon 3.1%
Others 30.5%
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Kitchen Appliances (cont'd)
Washing machines market shares in 35 major cities (2013) Absorber market shares in 35 major cities (2013)
Sinomonitor
Fotile 16.9%
Midea 12.9%
Haier 7.8%
Robam 7.1%
Aucma 4.9%
Vatti 4.8%
Chujie 4.1%
Others 41.5%
Haier 24.8%
Little Swan 10.0%
Siemens 7.1%
LG 6.2%
TCL 5.7%
Ariston 4.4%
Panasonic 4.3%
Others 37.5%
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Cleaning Electrical Appliances
Revenues & Profit
Like in other segments, high-end products have
recently been the main growth drivers. Handheld
vacuum cleaners, upright vacuum cleaners and
especially robotic vacuum cleaners are in high
demand from mid- to high income households, with
robotic vacuum cleaners being particularly appealing
in spite of their prices being notably above average
levels.
While local companies constitute the vast majority of
players in the sectors, it is foreign businesses that
lead the market, backed by their technological and
branding advantages.
Three regions in China account for over 98% of total
vacuum cleaner production in the country: Jiangsu
with 50.5% of all production, Guangdong with 27.8%
and Zhejiang with 19%.
Vacuum cleaners market shares in 35 major cities (2013)
National Bureau of Statistics, Sinomonitor, CHYXX
288 286
218 225 231
4.1 5.8 6.1 6.9 7.4
59
84
99
115 127
2009 2010 2011 2012 2013
Sales revenues Total profit, RMB bn No of enterprises
Phillips 24.4%
Midea 18.3%
Haier 16.0%
Panasonic 12.7% Lexy 5.7%
Electrolux 4.1%
Sanyo 4.0%
Others 14.9%
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Ventilation & Beauty Electrical Appliances
Ventilation Appliances, Revenues & Profit Beauty & Health Appliances, Revenues & Profit
National Bureau of Statistics
29.6
38.1 39.1
35.8
43.3
1.5 2.3 2.1 2.0 2.6
256
267
206 198
222
2009 2010 2011 2012 2013
Sales revenues Total profit, RMB bn No of enterprises
16.2
24.4
25.9
27.5
28.7
1.2 1.8 1.4 1.3 1.3
174
191
154
173 171
2009 2010 2011 2012 2013
Sales revenues Total profit, RMB bn No of enterprises
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Other Electrical Appliances
Clothing iron market shares, 2012
Gas water heater market shares in 35 major cities (2013)
Other Electrical Appliances Revenues & Profit
Askci, Sinomonitor, National Bureau of Statistics
43.6
46.3
54.3 52.6
58.1
2.3 3.0 3.0 2.8 2.5
559 548
400 392
406
0
100
200
300
400
500
600
0
10
20
30
40
50
60
70
2009 2010 2011 2012 2013
Sales revenues Total profit, RMB bn No of enterprises
Phillips 27.1%
Panasonic 11.8%
Ruitian Shengda 9.2%
Hongxin 5.6%
Tefal 4.8%
Haier 4.2% FLYCO 3.6%
Others 33.7%
Haier 6.7%
A.O.Smigh 2.6%
Ariston 2.6%
Midea 2.1% Shenhua 2.0%
Changhong 1.5%
Aucma 1.2%
Others 81.3%
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III. Main Players
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Source:
Gree Electric Appliances, Inc.
Financial performance
Gree Electric was founded in 1991 in Zhuhai and
was listed on the Shenzhen Stock Exchange in
1996. The company is a major global electrical
appliances manufacturer and has been the world
leader in sales of residential air conditioners since
2005 as well as China’s top appliance maker by
sales.
In September 2013, Gree Electric announced that
was considering an expansion into the banking
sector with its unit Zhuhai Gree Group Finance Co
Ltd entering talks for setting up its own private bank.
In 2013, Gree launched a new photovoltaic-driven
inverter centrifuge system for air-conditioners which
has been labelled as “internationally leading”. This is
the first time for the Chinese industry when solar
energy is used in air conditioning.
Most recently, the company announced a
considerable annual increase of 19.9% in sales for
2013, which Gree Electric attributed to the
technological focus of its development strategy.
Major competitors include Midea Electric Appliances
Co., Ltd., Haier Group Company and Samsung
Group.
Other Financials
Highlights
Company data
2008 2009 2010 2011 2012
Total operating expenses, RMB
mn 5,759 7,267 10,079 10,381 18,221
Cost of revenue, RMB mn 33,733 31,956 47,409 68,132 73,203
Total assets, RMB mn 30,800 51,530 65,604 85,212 107,567
Total liabilities, RMB mn 23,322 41,560 52,302 67,605 80,824
Total stockholders' equity, RMB
mn 7,478 9,970 13,303 17,607 26,743
Earnings per share 1.12 1.55 1.52 1.86 2.47
42,200 42,637
60,807
83,517
100,110
2,75
0
3,28
8
2,86
7
4,67
3
8,44
8
2,10
3
2,91
3
4,27
6
5,23
7
7,38
0
2008 2009 2010 2011 2012
Revenues, RMB mn EBITDA, RMB mn Net income, RMB mn
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Source:
Gree Electric Appliances, Inc. (cont’d)
Revenues by product, 2012
Regional distribution of sales, 2012
Company data
China 82.7% Rest of the
world 17.3%
Product Revenues
Air conditioner, RMB mn 88,886
Small appliances, RMB mn 1,453
Others, RMB mn 909
Expenses by type
8,050
14,626
2,783
4,055
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2011 2012
Overheadexpenses,RMB mn
Salesexpenses,RMB mn
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Source:
Haier Group
Qingdao Haier Co. Ltd. financial performance
Qingdao Haier Co. Ltd. other financials
Highlights
Company data
Haier was founded in Qingdao, Shandong province
in 1984 and received its present name in 1992. The
company’s product range includes air conditioners,
microwave ovens, washing machines, refrigerators,
mobile phones, computers, and TV sets.
Haier Group operates its business via two listed
companies: Qingdao Haier, which specializes in
appliance development, and Haier Electronics, which
represents an integrated service platform combining
retailing, e-commerce, and logistics as well as after
sales services.
Haier Group was the largest company in the global
market for large appliances for the fifth consecutive
year in 2013 with a share of 9.7%. In the same year,
the company also became the biggest manufacturer,
according to Euromonitor, with a global share of
11.6%.
In a major strategic move in 2013, the company
signed a partnership with the Chinese market leader
in online retail Alibaba with the latter investing HKD
2.82bn in Haier. The deal is expected to give a boost
to Haier’s position in the struggle with its local
competitors.
2008 2009 2010 2011 2012
Total operating expenses, RMB
mn 5,869 7,092 11,239 13,268 14,796
Cost of revenue, RMB mn 23,376 24,263 46,420 56,263 59,704
Total assets, RMB mn 12,231 17,497 29,267 39,723 49,688
Total liabilities, RMB mn 5,457 9,776 22,247 31,386 38,560
Total stockholders' equity, RMB
mn 6,774 7,721 7,020 8,338 11,129
Earnings per share 0.29 0.43 0.76 1.00 1.22
30,408 32,979
60,588
73,853 79,857
1,58
4
1,96
6
3,42
5
4,75
6
5,87
5
768
1,14
9
2,03
5
2,69
0
3,26
9
2008 2009 2010 2011 2012
Revenues, RMB mn EBITDA, RMB mn Net income, RMB mn
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Source:
Haier Group (cont'd)
Revenues distribution by business (2012, RMB mn)
Revenues distribution by region (2012)
Manufacturing costs (RMB mn)
Company data
34,592
36,315
1,620
1,597
268
303
289
337
1,298
1,469
31,000
32,000
33,000
34,000
35,000
36,000
37,000
38,000
39,000
40,000
2011 2012
Others
Energy
Ammortisation
Staff
Rawmaterials
Air-conditioners
14,769
Refrigerators 25,170
Small appliances
1,686
Washing machines
13,273
Water heaters 4,486
Parts 7,172
Channel integration
12,596
China 89.5%
Rest of the world 10.5%
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Source:
TCL Corporation
Financial performance
TCL Corp. was founded in 1981 in Huizhou,
Guangdong province. The company operates in four
business areas: multimedia, communications,
electrical appliances and TV/video electronics;
additionally TCL also has two affiliated business
areas: real estate and investment and logistics and
services. TCL Corporation has three listed units: TCL
Corporation, TCL Multimedia and TCL
Communication.
In 2012, TCL owned the number one TV brand
China, with a brand value of RMB 58.3bn.
In 2013, TCL reported a 21.96% growth in the sales
of air-conditioners, a 19.47% growth in sales of
refrigerators and a 27.45% growth in the sales of
washing machines. Still, the main driver of revenue
growth for the year was smartphone sales.
The company expects its profit to more than double
in 2013, with revenues surpassing RMB 100bn for
the first time.
TCL is shifting its focus to expansion on international
markets as the share of its foreign business has
been constantly rising over the past few years.
Other financial indicators
Highlights
Company data, Morningstar
44,295 51,870
60,834 69,629
85,504
1,08
1
501
1,86
2
2,65
6 4,56
9
470
433
1,01
3
796
2,10
9
2009 2010 2011 2012 2013
Revenues, RMB mn EBITDA, RMB mn Net income, RMB mn
2008 2009 2010 2011 2012
Total operating expenses, RMB
mn 5,988 7,295 8,193 10,773 13,256
Cost of revenue, RMB mn 37,551 44,535 51,119 58,108 70,359
Total assets, RMB mn 30,234 53,478 74,014 79,745 78,081
Total liabilities, RMB mn 24,942 43,204 62,709 67,998 63,912
Total stockholders' equity, RMB
mn 5,293 10,274 11,306 11,746 14,168
Earnings per share 0.08 0.06 0.12 0.09 0.25
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Source:
TCL Corporation (cont'd)
Electrical appliances sales (thou)
Revenues by region (2013)
Expenses
Company data
3,691 4,502
912
1,090 985
1,256
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2012 2013
Washingmachine
Refrigerator
Airconditioner
6,583
8,081
3,839
4,997 351
178
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2012 2013
Financialexpenses
Administrativeexpenses
Salesexpenses
Mainland China 57.8%
Hong Kong & the rest of the world 42.2%
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Source:
Midea Group
Midea Electrical Appliance financial performance
Midea, established in 1968 in Foshan, Guangdong
province, is currently present in over 200 countries
and regions and its publicly listed division, GD Midea
Holding, holds the world’s second place in global
household appliances sales.
The company’s business scope includes fans, air
conditioners, microwave ovens, dishwashers, rice
cookers, water dispensers, domestic gas appliances,
cooker hoods, heaters and vacuum cleaners and
electronic controllers, as well as other industries like
real estate, logistics, finance and machinery
manufacturing.
Midea Group went public on the Shenzhen Stock
Exchange in September 2013, while its former listed
subsidiary, Midea Electric Appliances Co., Ltd, was
written off, as new shares of the group company
were issued to the shareholders of the subsidiary.
Midea projected a 15% sales growth for the three to
five years following 2012.
Major competitors include Whirlpool Corporation,
Global-Tech Advanced Innovations Inc. and Haier
Group Co.
Midea Electrical Appliance Financials
Highlights
Company data
45,313 47,278
74,559
93,108
68,071
,1033 1,892 3,127 3,709 3,477
2008 2009 2010 2011 2012
Revenue, RMB mn Net income, RMB mn
2008 2009 2010 2011 2012
Total operating costs, RMB mn n/a 62,114 72,255 88,846 63,600
Total assets, RMB mn 23,384 31,658 42,054 61,510 60,900
Total liabilities, RMB mn 18,627 22,206 29,718 36,321 33,505
Total stockholders' equity, RMB
mn 4,757 9,451 12,336 13,394 14,193
Earnings per share 0.37 0.65 1.00 1.11 1.03
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Source:
Midea Group (cont'd)
Production Distribution of expenses, RMB mn
Company data
Product Indicator 2011 2012
Air-conditioners Sales volume, units mn 32.48 23.81
Production volume, units mn 33.73 23.69
Refrigerators Sales volume, units mn 11.08 5.60
Production volume, units mn 10.87 5.80
Washing machines Sales volume, units mn 12.41 7.66
Production volume, units mn 12.54 7.80
61,476
42,802
2,860
2,512
864
1,023
438
412
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2011 2012
Energy and power
Depreciation
Labour costs
Raw materials
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Source:
GOME Electrical Appliances Holding Ltd.
Financial performance
GOME Electrical Appliances Holding Ltd. was
founded in Hong Kong in 1987, adopted its brand
name GOME in 1993, and was listed on the Hong
Kong Stock Exchange in 2004.
The company specializes in consumer electronics
and electrical appliances retail and has a wide
network of outlets across China. GOME is currently
actively expanding the channels of its e-commerce
platform.
In late 2013, GOME entered a strategic partnership
with US-based global semiconductor company
Qualcomm Inc. to jointly develop the 4G smartphone
market. The company has already established over
50 4G experience centres and their number is
expected to reach 300 in 2014.
Following a tough period, GOME has been
aggressively cutting costs over the last year with a
number of underperforming stores being closed. As a
result, the company is expecting notably better
financial results for 2013, in spite of the overall
slowdown in the appliance retail industry.
GOME Financials
Highlights
Company data
45,889 42,668
50,910
59,821
47,867
1,099 1,426 1,962
1,801 -810 2,052 2,536 3,293 3,123 34
2008 2009 2010 2011 2012
Revenues, RMB mn EBITDA, RMB mn Net income, RMB mn
2008 2009 2010 2011 2012
Total Operating Expenses,
RMB mn 5,831 5,688 6,655 8,535 8,595
Cost of revenue, RMB mn 41,381 38,408 44,991 52,264 41,664
Total Assets, RMB mn 27,495 35,763 36,210 37,227 36,379
Total Liabilities, RMB mn 18,795 23,961 21,475 21,309 21,624
Total stockholders' equity,
RMB mn 8,700 11,802 14,735 15,918 14,754
Earnings per share 0.08 0.10 0.13 0.11 -0.04
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Source:
GOME Electrical Appliances Holding Ltd. (cont'd)
Number of stores
Regional distribution of sales revenue, 2012
Regional distribution of stores, 2012 Year End
Company data
Region Flagship Standard Specialized
Total Stores Stores Stores
Beijing 21 25 8 54
Shanghai 38 20 18 76
Tianjin 13 18 10 41
Chengdu 12 29 18 59
Chongqing 8 22 16 46
Xian 18 16 56 90
Shenyang 9 13 15 37
Qingdao 8 15 15 38
Jinan 6 7 18 31
Shenzhen 20 42 28 90
Guangzhou 19 45 65 129
Wuhan 7 19 18 44
Kunming 4 12 13 29
Fuzhou 7 15 19 41
Xiamen 4 15 20 39
Henan 4 20 17 41
Nanjing 2 17 20 39
Wuxi 1 5 8 14
Changzhou 3 8 5 16
Suzhou 4 6 12 22
Hefei 2 11 6 19
Xuzhou 1 3 12 16
Tangshan 2 – 7 9
Lanzhou 3 6 8 17
Wenzhou 2 2 8 12
826 726
859
726
1,079 1,049
2007 2008 2009 2010 2011 2012
Number of stores at year end
Shanghai 11% Beijing 10%
Guangzhou 11%
Shenzhen 10%
Chengdu 6%
Xian 6%
Tianjin 5%
Others 41%
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Source:
GOME Electrical Appliances Holding Ltd. (cont'd)
Revenues by product Operating expenses (as share of total revenues)
Company data
14.0%
13.8%
14.1%
9.6%
15.9%
4.5%
11.9%
13.8%
14.3%
14.6%
9.4%
16.8%
8.3%
11.7%
AV
Air-conditioner
Refrigerator and washing machine
Telecommunication
Small white appliances
IT
Digital
2012 2011
11.5%
14.2%
2.0%
3.0%
0.7%
0.9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2011 2012
Otherexpenses
Administrativeexpenses
Selling anddistributioncosts
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Contact:
Corporate Headquarters
Nestor House
Playhouse Yard
London EC4V 5EX
UK
Voice: +44 207 779 8471
Fax: +44 207 779 8224
Americas Headquarters
225 Park Avenue South
New York, New York 10003
US
Voice: +1 212 610 2900
Fax: +1 212 610 2950
Asia Headquarters
Eucharistic Congress Bldg. No.
III
4th Floor, 5 Convent Street
Mumbai 400 001
India
Voice: +91 22 22881123
Fax: +91 22 22881137
Disclaimer:
The material is based on sources which we believe are reliable, but no warranty, either expressed or implied, is provided in relation to the accuracy or completeness
of the information. The views expressed are our best judgment as of the date of issue and are subject to change without notice. EMIS and Euromoney Institutional
Investor PLC take no responsibility for decisions made on the basis of these opinions.
Any redistribution of this information is strictly prohibited. Copyright © 2014 EMIS, all rights reserved. A Euromoney Institutional Investor company.
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