The continuous rise in prices of raw materials such as copper, aluminum, and crude oil has driven up the costs of core components in household appliances, including ice compressors, TV display panels, and motors. For the household appliance industry this year, it's a situation of peril rather than opportunity. Of course, it may be an opportunity for a few select companies.
This round of price increases in upstream materials like precious metals and crude oil is not only significant in magnitude and speed but also in its prolonged duration, surpassing the expectations and understanding of many household appliance companies.
In the view of the household appliance industry, the current round of material price increases, which began in late March, is just a warm-up for the price war to come. The subsequent rise in costs will leave many appliance manufacturers dumbfounded.
Perhaps many "smart" appliance manufacturers will immediately think of one thing in response to this situation: is it possible to stockpile materials early in the price increase phase? For example, appliance companies stocking up on copper, compressors, and display panels, while appliance dealers, taking a simpler approach, directly increase purchases and stockpile more goods through bank loans from factories? Even some air conditioning companies have already used the anticipation of material price increases in late March to attract merchants to purchase goods and encourage users to buy. Although the results were not very good, it also presented some opportunities for certain companies.
Talk is cheap, action is what counts. Faced with this round of material price increases, many household appliance manufacturers are aware that prices will continue to rise. However, the household appliance industry has noticed that apart from a few companies strategically stockpiling materials, many appliance companies have not increased their purchases of raw materials; similarly, household appliance dealers closest to consumers have not significantly increased their stocking efforts.
The reason is simple: opportunities arise from downturns, and risks emerge from upturns. It is believed that in the face of this year's market environment and trends in the household appliance industry, few appliance manufacturers dare to blindly stockpile materials and gamble on the next price increase. Instead, they will make appropriate "preparations" based on their own operational capabilities.
Many household appliance manufacturers believe that the current situation of material price increases is more of a peril than an opportunity. Firstly, the inevitable increase in material costs will push up the overall cost of household appliances, and price increases at the consumer end are only a matter of time; currently, in the eyes of many manufacturers, appliances that have reduced prices are not selling well, let alone appliances that are expected to continue to rise in price—who will they sell to? Secondly, while the overall operating costs of household appliance manufacturers continue to rise, overall demand at the consumer end remains sluggish, with rising costs on one end and declining demand on the other, ultimately putting pressure on household appliance companies, with many facing the risk of exiting the market.
So, what are the specific risks and pressures for household appliance manufacturers in this round of material price increases? According to the household appliance industry, they mainly focus on three dimensions: enterprise operation, market competition, and user operation.
Firstly, for enterprise operation, the main risk lies in the "risk of desire." Because the upward trend in raw material prices is a trend for the future, although there may be fluctuations in the meantime, the upward trend will not change. For household appliance companies, whether or not they dare to stockpile raw materials in advance is not only a pressure on capital costs but also a consideration of what to do if subsequent sales and shipments in the terminal market are sluggish. Previously, there have been cases of TV companies hoarding LCD panels and air conditioning companies hoarding copper materials, ultimately leading to situations where "complete machines do not sell well, but profits are made solely by selling LCD panels and copper materials." As for whether such market opportunities will exist in the future and to what extent, it requires household appliance companies to analyze scientifically and act according to their capabilities. In the short term, there may be opportunities, but the risks are greater. What's most important is that market price competition will not disappear.
Secondly, for commercial competition, it's essentially the same problem as for companies, but the risks are even greater. Because merchants stockpile entire machines, but the fact remains that costs are rising and terminal demand is weak. Therefore, the household appliance industry reminds many dealers that retail at the terminal must be "actively entering and quickly selling." They should not gamble on the opportunity to stockpile due to the rise in entire machine prices, nor should they gamble on the consumption rebound and recovery in the terminal market. Market demand has already stabilized. Even if household appliances increase in price, it will be a trend for the entire industry, not just raising the operating costs of individual merchants. Therefore, many household appliance dealers this year aim to "go with the flow" and avoid speculation.
Thirdly, for user operations. This round of material price increases will have the greatest impact on small and medium-sized enterprises. Because the competitive advantage of small and medium-sized enterprises in the past has been their cheaper product prices, which allow merchants to make more profits and consumers to feel like they are getting a good deal. Now with the rise in costs, many small and medium-sized enterprises will resort to methods such as "cutting corners" and "substituting inferior for superior" in their products to maintain their competitive pricing advantage in the market. However, this will inevitably damage the credibility of cooperative merchants and exhaust future demand from users. As a result, this will also expand the market competition advantage of large enterprises with stronger risk resistance. Their good products, good services, and strategic determination will ultimately win the trust of users.
It can be foreseen that the development and competition in the household appliance market this year, for all manufacturers, cannot escape price competition and will be difficult to transform operationally.
