China's Kitchen Electrical Appliance Market

I. Market Overview

China’s kitchen appliance market has expanded considerably in recent years. According to mainland market surveys, the total value of China’s kitchen electrical appliance market in 2018 was around RMB67.8 billion. Range hoods, water heaters, gas stoves and rice cookers are among the products most in demand, while sales of dishwashers and ovens registered the fastest growth.

In the long run, growing urbanisation is expected to drive steady expansion in the kitchen appliance industry. By 2018, China’s urbanisation rate stood at 59.6%, and it is projected to rise by about one percentage point annually. Advances in urbanisation, the real estate market and smart home appliances are all seen as conducive to the development of the kitchen appliance market.

Consumers’ brand awareness continues to heighten, with more emphasis being placed on product design, functions and features, while price sensitivity is falling. Medium to high-end products are becoming the mainstay of the consumer market. The demand for eco-friendly and energy-efficient kitchen appliances is also growing as consumers’ environmental awareness increases.

The growing demand for ‘smart’ kitchens is another important development in this market. Many Chinese and foreign companies, including Siemens and Haier, are competing to develop smart kitchen systems, focusing on the connectivity of kitchen appliances with smartphones and tablet computers. They are also looking to drive innovation in smart technology. An example of this is the Conductor series of smart kitchen appliances, launched by Casarte under Haier, where technologies like artificial intelligence and big data are used to draw up nutritional diet plans for users based on an analysis of their daily life.

Mainland consumers are increasingly concerned about using space more efficiently in their kitchens. There’s a growing demand for multifunctional cookers integrating a range hood, gas stove, disinfecting tableware cabinet and oven. These cookers are also eco-friendly – they purify the air almost completely, removing 95% of the grease created in the cooking process. Smart integrated cookers can be fitted with intelligent circuit protection devices and have an automatic gas supply cut-off automatically when they are switched off or when there is a power leakage. They can also come with an automatic gas monitoring function to alert users of a gas leak.

Although built-in kitchen design is nothing new, it has only begun to become popular in the last few years. Examples include Fotile’s built-in electric steamer and Siemens’ built-in coffee machine. Kitchen appliances launched in recent years by Bosch all have built-in design. Built-in designs, which fit in well with the ‘holistic kitchen’ concept, are popular with younger consumers, and the age of the average mainstream consumer is continuing to fall.

As consumers have become more health-conscious, healthcare-oriented appliances like high-speed blenders and multi-function glass kettles have grown in popularity. High-speed blenders can crush the cell walls of fruit and vegetables to make it easier to absorb their nutrients. Multi-function glass kettles can be used for making soup, medicated dishes or flower tea.

The trend towards localisation is also changing the kitchen appliance market. Some kitchen appliances widely used abroad are unlikely to be seen in Chinese kitchens. For instance, induction cookers, with their flat, distinctly Euro-American style design, are popular in the US and Japan, but not in China, where traditional cooking styles using high flames and round concave pans make them unsuitable. In light of this, some companies have launched induction cookers that can accommodate concave pans.

Imports of major kitchen appliances in 2018:

Source: Global Trade Atlas

II. Market Competition

None of the leading home appliance brands, such as Fotile, Vatti, Macro, Vanward, Robam and Sacon, enjoys an absolute advantage in China’s kitchen appliance market. There is competition between businesses based in the Yangtze River Delta (YRD) and those operating out of the Pearl River Delta (PRD). The leading brands in the YRD are Fotile, Robam, Sacon and Dandy, while the leading brands in the PRD are Vatti, Vanward, Macro, Midea and Oupai.

Refrigerators: There were 32.72 million retail sales of refrigerators in 2018, a decrease of 3.1% from the year before. Brands are looking to increase market share by upgrading the design and functions of their products. In terms of functionality, mainland businesses have developed innovations such as technology designed to remove pesticide residue and eliminate odours expeditiously. Multi-door refrigerators, especially four-door units, have become popular. In the near future, consumers buying refrigerators are expected to give greater consideration to factors such as energy efficiency, high quality, large capacity, support for healthy lifestyles and the ability to satisfy a variety of demands.

Microwave ovens: Major brands in China’s microwave oven market include Galanz, Midea, Panasonic and Haier. Galanz and Midea are the market leaders.

Induction cookers: Brands such as Midea, Galanz, Joyoung, Supor and Povos account for the lion’s share of the market. The majority of induction cookers on the market are the touch-control type, while there is a trend towards slim, light-weight designs. Sales of induction cookers in China are currently concentrated in first- and second-tier cities. Penetration in the third- and fourth-tier markets and rural markets is relatively low.

Rice cookers: The leading brands, including Gree, Midea and Supor, have all strengthened their development of induction heating (IH) rice cookers in a bid to be more competitive. This is expected to promote the structural upgrade of the rice cooker industry.

Range hoods: 18.42 million range hood sets were sold in 2018. Range hood technology has become very mature. The leading brands are Fotile, Midea, Robam, Vatti and Siemens. The three main qualities consumers consider when buying range hoods are product design, fume extraction rate and noise level. While European range hoods are considered stylish in terms of exterior design, near-suction hoods have higher fume extraction rates.

The battleground for competition in the mainland kitchen appliance market has moved from price to technology, with companies shifting their focus towards the medium- to high-end market. Many manufacturers on the mainland are now putting a lot of effort into R&D. Different product models and functions have been designed to suit consumers’ cooking habits and homes.

III. Sales Channels

The main sales channels in the mainland kitchen and bathroom appliance market are department stores, supermarkets, e-commerce platforms, home appliance chain stores such as Gome and Suning, building materials chain stores like Orient Home and HomeMart, and general merchandise chains including Carrefour and Wal-Mart. General merchandise chains mainly sell foreign brands.

Home appliance chain stores have become one of the major channels for people in large and medium-sized cities buying household appliances. Third- and fourth-tier cities are currently the main consumers of electrical appliances, so the major home appliance groups are actively expanding the number of their stores in these cities and in the rural markets. Kitchen and bathroom appliance manufacturers have become increasingly aware of the popularity of home appliance chain stores among consumers, and as a result are setting up dedicated displays and sales points inside chain-operated hypermarkets.

As new building materials chain stores have emerged, household appliances - especially kitchen and bathroom appliances - have begun to be sold in several large-scale building materials supermarkets. These stores provide another alternative to traditional department stores and specialised electrical shops (including home appliance chain stores).

Kitchen appliances are also sold at home centres, but the sales volume is much smaller than that of traditional household appliance stores, and the range of products on offer is not as specialised. Home centres mainly sell kitchen and bathroom appliances that are closely related to the home, along with small home appliances.

As the B2C and O2O models have gradually gained ground in the kitchen appliance market, all the leading kitchen appliance brands have built e-commerce platforms. Fotile, Macro, Robam and Vatti have their own online malls, and have also authorised other e-commerce platforms, such as Suning.com and JD.com, to sell their products. According to a report on China’s electrical appliances online shopping market, in 2018 the value of China’s B2C home appliances online shopping market (including mobile platforms) reached RMB576.5 billion. Sales in the online market accounted for RMB44 billion of that total, a rise of 25.7% from the year before. Companies are speeding up the establishment of offline experience stores and flagship stores, in order to reinforce consumers’ online and offline experience and interaction and make shopping quicker and more convenient.

Since the Detailed Implementing Rules for the Construction of Commodity Housing were issued by the Residence Industrialisation Promotion Centre under the Ministry of Housing and Urban-Rural Development, residential units sold by developers may provide not only interior decoration, but also a full set of kitchen and bathroom appliances. This trend towards intensive interior decoration has seen a change in the way kitchen appliances are sold. Co-operation with property developers has now become an important channel for kitchen appliance sales. Among the kitchen appliance enterprises taking advantage of this new trend are Fotile, Sacon, Ariston and AO Smith.

Selected household appliance exhibitions to be held in 2019 and 2020 are listed below:

IV. Import Regulations

Since 1 August 2003, all products listed in the CCC (China Compulsory Certification) catalogue which have not obtained the necessary certificate and certification marking cannot be imported to China, sold on the market or used in business operations. When imported products entering the country go through customs clearance, they must present the CCC to the entry-exit inspection and quarantine department at the port of entry. The inspection and quarantine department will select a certain proportion of the products for random marking inspection and will conduct tests in compliance with the relevant technical requirements under the CCC guidelines.

According to the Interim Administrative Measures for the Inspection of Imported Household Electrical Appliances, imported household electrical appliances must be inspected by the commodity inspection department (or other duly approved inspection bodies) within the timeframe specified in the contract. Uninspected complete machines of imported household electrical appliances may not be sold while uninspected parts may not be assembled.

The Regulations for the Administration of the Recovery and Disposal of Waste Electrical and Electronic Products (or China WEEE) came into force on 1 January 2011. Under these regulations, five categories of products, including refrigerators, became the first batch of products to be recovered and dismantled in accordance with national standards. The regulations stipulate that only enterprises qualified to dispose of electrical and electronic products may dismantle waste electrical and electronic products, extract raw materials from them or carry out final disposal in compliance with the environmental protection requirements.

Industrial standards for five types of kitchen appliances, including electric frying pans, electric stoves, commercial soymilk makers, grill toasters, and electric stew-pots and similar appliances, came into effect on 1 June 2013. Of these, the standard for electric frying pans has since been revised. These industrial standards aim to regulate the normal and orderly development of the small kitchen appliance industry.

Rules of Energy Efficiency Labelling for Household Induction Cookers (Revised), Rules of Energy Efficiency Labelling for Heat Pump Water Heaters and Rules of Energy Efficiency Labelling for Range Hoods were implemented on 1 January 2015. They regulate the usage, specification and product inspection of energy efficiency labels.

A new version of the national standard Minimum Allowable Values of Energy Efficiency and Energy Efficiency Grades for Household Induction Cookers (GB 21456-2014) has been in place since 1 January 2015. This extended the application of the standard to induction cookers in the 700W-3,500W range, and revised the requirements and methods of testing. On 1 April 2015, the national standard Minimum Allowable Values of Energy Efficiency and Energy Efficiency Grades for Domestic Gas Cooking Appliances (GB 30720-2014) came into force. In both of these standards, three energy efficiency grades have been set, with Grade 1 representing the most energy efficient and Grade 3 representing the least. Any products with an energy efficiency value lower than Grade 3 must be phased out. The standards also lay down specific methods for testing energy efficiency.

The revised national standard Maximum Allowable Values of the Energy Consumption and Energy Efficiency Grade for Household Refrigerators (GB 12021.2-2015) replaced the older version (GB 12021.2-2008) on 1 October 2016. The new standard sets five energy efficiency grades, with Grade 1 representing the most energy efficient and Grade 5 representing the least. All products with an energy efficiency value lower than Grade 5 must be phased out. Refrigerators must be affixed with energy efficiency labels to indicate their energy efficiency grading, with any lacking labelling prohibited from being sold. The new version of the standard features much higher requirements. For example, the maximum allowable value of energy consumption for Grade 1 products under the revised standard is about 40% lower than before.

The Safety Handbook on Food Contact Materials released by the Electric Rice Cooker Committee of the China Household Electrical Appliances Association in April 2017 made clear provisions regarding materials that come into contact with food. For example, perfluorooctanoic acid (PFOA), perfluorooctanesulfonic acid (PFOS) and their salts may not be used as processing additives on the coating of the inner shell of rice cookers.

Household and Similar Refrigerating Appliances (GB/T 8059-2016) has been in force since 1 July 2017. It replaced four previous standards covering household refrigerating appliances. This new guideline features revised testing methods for energy consumption and noise, as well as new testing methods for cooling and condensation.

Minimum Allowable Values of Energy Efficiency and Energy Efficiency Grades for Electric Rice Cookers (GB 12021.6-2017) came into effect on 1 June 2018. This new standard not only covers IH rice cookers but refines the formula for calculating heating efficiency to reflect the true energy efficiency of the rice cooker more accurately. Electric rice cookers must be affixed with an energy efficiency label before they can be sold.

The Modularisation Design for Household and Similar Electrical Appliances: Guideline for Refrigerator (GB/T 36925-2018) came into force on 28 December 2018, setting out requirements on the principles, methods and design flow in modularisation design for refrigerators. This guideline can also be referred to when designing other refrigerating appliances like freezers and wine coolers.

The General Technology Requirements for Intelligent Household Appliances (GB/T 28219-2018) have been in force since 1 January 2019, replacing the General Rules of Intelligentisation Technology for Intelligent Household Appliances (GB/T 28219-2011). The new standard spells out requirements on the terminology, definition, general technology and evaluation methods for intelligent household and similar appliances, intelligent household appliance systems and intelligent living.

From 1 July 2018, the State Council reduced most-favoured-nation (MFN) tariffs for 1,449 taxable items of daily consumer goods, including kitchen supplies. The 2019 import tariffs of selected kitchen appliances are listed below:

Source: Customs Import and Export Tariff of the People's Republic of China 2019