Air-conditioned second-tier brands exit the regional market

From the second half of 2011, China’s air-conditioning market has entered the persistently cold winter of “growth slowdown, declining demand, and overall sluggishness”, especially in 2012, the air-conditioning industry encountered the worst performance since 2006, the entire The pattern of the air-conditioning industry has also changed. Starting from the market situation with three oligarchs, it has become Gree's thriving one.

The worst performance in the past two years since 2006, the overall sales situation of the domestic air conditioner market has undergone fundamental changes. According to a “White Paper on the 2012 Refrigerating Year China Air-Conditioning Market” published at the end of the 2012 cold year, the sales volume of the domestic air-conditioning market in the cold year 2010 increased by 31.45% year-on-year, and the sales increased by 24.13% year-on-year; in the cold year of 2011, the domestic cities’ air conditioners Sales volume increased by 20.45% year-on-year, and sales increased by 28.64% year-on-year. In the cold year of 2012, due to a series of issues such as market pressure, inventory pressure and poor convergence of policies, domestic air-conditioning sales decreased year-on-year. 25.12%, sales fell 19.36% year-on-year, and the year-on-year substantial growth has abruptly ended.

As Lu Jiebo, deputy secretary-general of the China Electronic Chamber of Commerce, said that in 2012, for the air-conditioning industry, it was a veritable “cold year”. From January to October 2012, the air-conditioning market’s retail sales and retail sales fell by 20.15% and 16.34%. The monitoring data of Zhongyikang also showed that 2012 was the worst year for the air conditioner industry since 2006.

In such a severe market environment, companies in the air-conditioning industry began to differentiate, and a few pyramid-leading companies can still maintain the growth momentum. However, more air-conditioning companies are experiencing tremendous operational pressure.

Gree hits the dust in the most recent days, Gree Electric released a performance report that in 2012 Gree achieved total operating revenue of 10.084 billion yuan, an increase of 19.84%, an operating profit of 8.058 billion yuan, an increase of 77.41%, a total profit of 88.01 Billion yuan, a year-on-year growth of 39.07%, was attributable to the listed company's shareholders of 7.378 billion yuan, an increase of 40.88% year-on-year. Gree became the first domestic appliance company with a single product category exceeding 100 billion yuan.

Only from the perspective of the air-conditioning industry, Gree also "had a ride" and left other competitors behind. According to industry online statistics, Gree shipped 3.46 million units from January to November, an increase of 6.8% year-on-year, while the air-conditioning industry experienced a 10.3% decline in the same period. Domestic sales accounted for more than 50% of the domestic market from September, and increased to 58.90% in November. The current market share of inverter air conditioners reached 53.35%, showing a super-leading trend. In the first half of 2012, central air conditioners occupied the largest share of the domestic market, and expectations for growth in 2013 exceeded 40% since the cold year. The strong Hengqiang has been fully demonstrated at Gree Electric.

Industry experts said that the past two years, Gree air conditioning's strong lead, has begun to urge the air conditioning industry from the past, "Gelimi's double oligarch, Haier third year," the market situation, began to deform into Gree's thriving.

The gap between Gree and Midea in the air-conditioning business is widening. From the previously published financial report data, we can see that in 2010 Gree air-conditioning business operating income was 55.109 billion yuan, the United States than the electrical business revenue of 6.9 billion higher. In 2011, according to data from the 2011 financial statements of the two companies, Gree has already led the United States’ nearly 11 billion yuan in air conditioner operating revenue. In 2012, the gap between Gree and Midea in the air-conditioning industry further widened. The US three quarterly report showed that it achieved revenue of 53.8 billion from January to September this year, and its air-conditioning business accounted for less than two-thirds of the total business, and Gree The third quarter revenue was 771.65 yuan. The unbreakable air-conditioning duopoly pattern has been loosened over the years.

Since the beginning of last year to this year, Midea has continued to make top-down adjustments. Both sales and market share have undergone certain adjustments. In addition to Gree's food-grabbing market, Haier, which has been the oldest in the industry, has also clearly benefited. According to data from July of the 2012 cold year in China, Yikang indicated that in the overall market share of air conditioners this year, the United States dropped by 2.46 percentage points, while Gree and Haier had growth of 3.04 and 1.53 percentage points respectively. Qingdao Haier’s previously announced three-quarters report shows that from January to September this year, Haier’s air-conditioning business revenue increased by 18% year-on-year, with the quarterly revenue for the third quarter growing 38.5% year-on-year, accelerating further.

The statistics of second-tier brands shrinking to regional markets shows that at present, only three domestic brands, namely Gree, Midea and Haier, have a market share of more than 70%, and the share of second-tier brands such as Hisense Kelon, Zhigao, Galanz, and Oaks is nearly 20%. There is a big gap between the first and second-tier brands. Compared with first-line brands with more advantages in technology, brand, capital, and scale, some second-tier brands have insufficient ability to cope with risks in the industry's low tide, encountered temporary operating difficulties, and the market is weak, and sales volume declines. The gap has further widened.

Taking Chigo, a professional air-conditioning manufacturing company, as an example, according to the interim results report released by Zhigao Holdings as of June 30, 2012, the company's turnover was 5.224 billion yuan, down 1.9% year-on-year, with a net profit loss of 0.18 billion yuan. 0.3%. Gree Electric had a total of 48.303 billion yuan in the first half of the year. Midea’s electric appliances and related accessories earned 9.8 billion yuan in the first half of the year. Haier’s air conditioning revenue reached 9.18 billion yuan in the first half of the year, and Gree, Midea, and Haier’s gross margins were all above 20%. The net profit can basically reach 3%-5%, and the gap between Chigo and these three companies is quite obvious.

In recent years, with the help of policies such as home appliances to the countryside and energy-saving subsidies, the demand for the first and second-tier air-conditioning markets has advanced overdrafts. In the second half of 2011, the industry's profits have been lowered to 16% from 30% in the previous three years, and the survival of many regional brands is in jeopardy. With the policy of home appliances going to the countryside completely expired at the end of this month, and the implementation of the new energy-saving benefits subsidy policy in June 2012, some regional brands will face a new wave of reshuffle.

As for the foreign brands whose market space is further compressed, quite a few brands such as Hitachi, Panasonic, Samsung, and LG have now retreated to some subdivided regional markets, and their future survival will be even more difficult.