Back in 2005 the products have been widely expected that electric stove to cook in the market for Chinese households in subsequent years continued, because of their “efficiency, safety, energy efficiency and environmental friendliness.” But fast forward to 2007, the electricity market in China ovens was so slow that the situation did not turn around sales. Not only is the expected increase in sales does not happen, but there were a lot of unsold stocks in warehouses. Most producers blame the “market disruption” for the market behavior.
Many producers
When we speak of “market disruption”, many business leaders said the large number of eletrical manufacturers of varying quality is the main cause.
“The boom and the high profitability of the market electric stove in 2005, many new participants, including some companies with the lowest capital and technological bases, attracted because of the low entry barriers. There was once up to 1,000 producers in the market and the oversupply party was discovered, the purchasing power of the market. You can say that since the sudden decline in 2006 in the market, “said Qiu Mingyong, project engineering GoldYip Dongguan-based electronics.
The rush of investors has created two problems in the industry. One is that the products of some companies was the reckless confidence of consumers in electric ranges, such as low quality, short shelf life and safety concerns undermined. And the other problem is that it led to an imbalance between supply and demand.
“The market has seen sales by 7-8% (on the previous comparable period) in the first half of 2007,” Yang said smoking, general manager of another manufacturer in Dongguan Supor electronic-based. “The market was slightly better in the second half because of an industrial-scale initiative. I’m expecting a sales growth is stable in 2008, a total of 30 to 32 million units for the entire domestic market.”
Given the excess capacity, demand and the imbalance between supply and sell inventory, many companies began e-stove, to reduce their prices to get business. Especially since 2007, some manufacturers had electric cooker, by industry barometer Galanz waged a fierce price war started. Some manufacturers have already been forced to the exit, completely out of the market, which resulted in a higher concentration of brands in the industry. According to market research, to October 2007, the top 10 brands in China electric stove a collective market share of 87%. Currently there are about 700 to 800 players in the Chinese market.
Always feed the market
“No doubt, stoves, electric pans products are the future for the domestic kitchen, and it also corresponds to the energy policy of the Chinese government. But as a tool for the long cooking time in China, gas stoves will not be replaced entirely by households in the foreseeable future,” said Li Peng, director of marketing power Taiwanese leader Sunpentown skillet.
Another industry expert also suggested that the marketing strategies, e-stove company should focus on aspects such as energy efficiency and environmental friendliness in order to differentiate them from gas cookers to win acceptance by the consumer, instead of blindly following the expansion of market share.
“Revenue growth in the first and the second largest market (large and medium cities in China) is to tend to slow down in coming years. On the other hand, as the purchasing power is rising in rural areas, the markets of the third and fourth place in China is strong growth spots for electric stoves have become short term, “said Qiu.
The lack of industry standards
Li noted that with the current electric stove brands in China, there are only a few dozen strong players. Others are mostly small shops with small capacities, outdated production technologies and production also does not allow.
It is understood that in regard to product performance, electric stoves in China by QB/T1236-91, a standard for thermal efficiency, noise and energy efficiency will be operated. But this is only recommended as standard with little effect on the manufacturer of the regulation. In terms of safety performance, electric cookers are also covered by the national standards for safety of household appliances.
Some industry insiders pointed out that the lack of mandatory industry standards has created many loopholes for unscrupulous operators. Many companies are still technologically backward survivors and their low quality and cheap products are still in circulation on the market. It is not only distorts the market pricing system, but also affects consumer confidence and interest.
In November 2007, the highly anticipated official standard for domestic use eventually all of the Standardization Administration of the Government of China (SAC) announced. The standard regulates various aspects of electric stoves, such as energy efficiency limits, the evaluation of energy efficiency, energy efficiency classification, testing and inspection requirements. Many companies are hoping that this standard can be regulated by the market China’s electric stove.
Industry on the lookout for Extended
Despite sluggish, the Chinese market for electric heaters, in 2007 there were new entrants. Qiu, whose company GoldYip was one of those brave souls who said: “We were mostly doing radio and MP3 in the past has been 2007, the year of our first production electric stove, with a production capacity of 200,000 units, we plan to increase by 500 000. units in 2008. “
It seems a little crazy, in order to increase the capacity under the current market, but Qiu not think so. “The market went into an electric stove” ice age “since the end of 2006 with sales growth is stagnant. But this is more because of excess capacity, a disorderly competition and the lack of standards, industry and the excessive boom in the past two years had also exhausted the energy market. This does not necessarily mean the sky for electrical heaters in China is down more. “
Yang also revealed that in the context of the market in 2007, excited, Supor has not registered a sales growth of 40%. “After the consolidation of brands in 2007, should the market in 2008, more regulated and the degree of concentration of the brand should also improve.”
Li noted that the current weakness of the electricity market stoves a normal phenomenon in the development process in the industry. “Reasons, such as ceramic top material costs, low product quality and consumer confidence will be dampened any temporary factors. Since the market is more regulated market for electric stove China should enter a period of more stable development in the future.