100-Billion-Yuan Home Appliance Packaging Market Hits a Cyclical Inflection Point as Suppliers Warned to Watch Out for Pitfalls

In the first half of the year, the home appliance market showed the dilemma of "cold at home, hot abroad". The domestic home appliance industry entered an "involution period" of limited competition, and exports did not really make money. It is expected that in the second half of the year this home appliance packaging market, with a scale of 100 billion, will face greater pressure, and home appliance packaging enterprises must be prepared to avoid stepping on mines.

According to data monitoring by AVC, affected by rising raw material prices and weak domestic demand,

In the first half of 2021, the retail sales growth rate of China's home appliance retail market was only 12.3%, down 10.3% compared with the first half of 2019, and the market fell into a downturn after the second quarter.

In the first half of 2021, China's color TV market recorded cumulative sales of 17.81 million units, down 14.7% year on year, and sales of 59.4 billion yuan, up 15.1% year on year, with an average price of 3,332 yuan, up 34.9% year on year.

From January to June 2021, the retail volume of the air conditioner market was 27.216 million units, down 5.7% year on year, and the retail sales were 85.79 billion yuan, up 3.3% year on year.

According to the data, in the first quarter of this year, the all-channel retail volume of the refrigerator market was 6.74 million units, up 43.9% year on year, and the retail sales were 20.9 billion yuan, up 60.8% year on year; in the second quarter, the retail volume was 9.21 million units, down 11.3% year on year, and the retail sales were 26.3 billion yuan, up 0.4% year on year.

In the kitchen appliance sector, from the overall rhythm of the first half, the market divergence between the first and second quarters was very obvious. Taking the range hood market as an example, in the first quarter of this year the retail sales were 5.8 billion yuan, up 89% year on year; in the second quarter the market retail sales were 9.9 billion yuan, up 2% year on year; and the overall market size in the first half was 15.7 billion yuan, up 23% year on year. In the gas stove market, the first quarter retail sales were 3.5 billion yuan, up 60% year on year; the second quarter market retail sales were 5.3 billion yuan, down 3% year on year; and the overall market size in the first half was 8.8 billion yuan, up 15% year on year.

Data shows that in the first half of 2021, retail sales of small home appliances (rice cookers, induction cookers, electric pressure cookers, soy milk makers, etc.) totaled 25.08 billion yuan, down 8.6% year on year; retail volume was 119.11 million units, down 8.2% year on year.

AVC expects that the domestic retail market trend in 2021 will be high at the beginning and low at the end, and the market will generally face greater growth pressure in the second half of the year.

Affected by rising raw material prices and weak orders, the share prices of the two major home appliance giants Midea and Gree continued to shrink, and their capital chains became tighter.

With 22 billion in stock buybacks launched over two years, Gree's share price has slid steadily. From the beginning of 2021 to date, Gree Electric's share price has fallen by 22.88% cumulatively, from the closing price of 62.9 yuan/share on the first trading day of 2021 to today's closing price of 48.51 yuan/share. Judging from the share price trend chart since the start of this year, Gree Electric's share price has been declining all the way, only occasionally rebounding in a few periods. With Gree Electric's shares shrinking sharply, loans of 20.831 billion yuan from seven banks including China Merchants Bank and Bank of China may fall into an awkward position.

Midea Group hit a historic high of 106.4 yuan in February this year, then entered a downward channel, and its market value has now evaporated by 300 billion. On August 3, Midea Group disclosed the progress of its share repurchase. As of July 31, 2021, the company had repurchased 51,097,951 shares through a dedicated securities account for repurchase, with a total payment of 3.538 billion yuan.

In the export market,

In the first half of the year, home appliance exports reached as high as 1.85 billion units, with total export value exceeding 3 trillion, up 35.8% year on year.

However, the three major factors of rising raw material prices, rising international shipping costs and large exchange rate fluctuations made it difficult for home appliance enterprises to increase profits from export business despite higher revenue. After working hard for half a year, they only earned loneliness.

On July 15, Li Chengwu, deputy general manager of Guangdong Elite Electrical Appliances Co., Ltd. (hereinafter referred to as "Elite"), said bluntly in an exclusive interview with our reporter that the company is having a tough year this year, although Elite's export business in the first half of this year has grown by more than 30% year on year and full-year sales are expected to grow by around 20%. "

"Breaking even is already our highest goal (this year); let's get through it first. It is not about how much money we make now, it is about not starving to death, and holding on to these businesses and customers," Li Chengwu said.

However, the boom in home appliance exports was built on the basis of European and American markets overdrafting future consumption. Entering the second half of the year, as US dollar reverse repos continue to increase, the boom in export orders will be hard to sustain.

Therefore, if things go badly, home appliance exports and domestic demand orders may both decline in the second half of the year.

It can be foreseen that the tight funds and softening orders in the home appliance industry will be transmitted to the packaging industry, which will make the situation even more difficult for home appliance packaging suppliers who already have relatively long payment terms.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-377956.html