The only highlight in the home appliance market in 2024, and also the biggest hot topic, is the layout and competition for the "trade-in for new" market. The key focus of all manufacturers in the next 2-3 years will be channel layout, product investment, and marketing efforts in this direction and trend.
Written by He Sheng
Every company is promoting "trade-in for new," every merchant offers subsidies for trading in old appliances, and everyone in the home appliance industry is talking about seizing the market for replacing old appliances.
However, our biggest concern is: this round of "trade-in for new" in the home appliance industry that everyone is engaged in will definitely lead to a completely new price war, and it will be a price war disguised under the cloak of trade-in subsidies. It may also turn into a market competition driven by numerous manufacturers, leading to a chaotic situation of homogenized fierce battles, where low profits or even losses are incurred in the rush to grab market share. What is the value and significance of this?
Currently, with the country accelerating and intensifying the explosion of the home appliance "trade-in for new" market at the national level to stimulate consumer demand, many manufacturers are also reflecting and reorganizing during their participation. They are considering how to avoid blindly rushing in and not missing out on the coverage of this round of new industrial policies.
In their view, the trade-in policy is indeed powerful and sustainable, with escalating measures from the central to local levels, achieving two direct impacts: one directly affecting home appliance manufacturers and the other directly affecting trade and distribution companies. After May, almost all home appliance manufacturers will focus on the frontline market competition for "trade-in for new," and no one dares to wait and watch.
While heating up the market for replacing old appliances, this will also accelerate the intensity and fierceness of market competition. As the saying goes, "every coin has two sides," one side being opportunity and the other being the unknown. Many home appliance manufacturers are worried and anxious that the new round of competition for replacing old appliances will inevitably intensify the complexity of competition: how can manufacturers achieve differentiated layouts under homogenized competition? Relying solely on being the first or running faster is not enough. In an era of turbulence and change, will consumers be willing to make purchases? Can the desire for replacement activate, and will substantial investments face the risk of being in vain?
For home appliance manufacturers, the uncertainties and challenges in market operations and competition this year are numerous. The most critical and important aspect, as the home appliance industry believes, lies in two areas: first, the users - do they really have demands, and how much demand exists? Second, the manufacturers - what are they competing for, and why?
At this stage, the greatest uncertainty for many home appliance manufacturers lies in the demand for home appliances and the purchasing desires of users, which are currently generally unpredictable and unconfirmed. Especially after the home decoration season in March and April, the mainstream consumption in the frontline market did not bring confidence and strength to manufacturers. The consumption market during the May Day holiday showed mixed trends, with some areas being hot while most markets experienced a downturn, causing many merchants and companies to feel painful, anxious, and uneasy.
In addition to the uncertainty of end-demand, there is also the issue of certain investments by many manufacturers, especially the resource investments focused on trade-in subsidies. Will these investments yield the expected results? Will the substantial resources, funds, and profits invested bring returns? If manufacturers sacrifice profits or sell goods at low prices just to compete, who will benefit from this? For home appliance manufacturers, the purpose of trade-in for new is definitely not just to sell more goods or sell cheaper goods, but to adjust the structure, improve quality, change the track, and shift the mindset to sell products that are valuable, cost-effective, and have good user reputation, aiming to capture brand-loyal customers who engage in sustainable interactions. If they continue to compete solely on price through a different method, what value and significance do the subsidies hold?
From Gree Electric Appliances' 3 billion special subsidy for home appliance replacement to Midea Group's 8 billion special subsidy for home appliances, HVAC, elevators, medical equipment, and other industrial equipment, and the participation and response from a large number of medium and large home appliance companies such as Changhong, Haier, and Hisense, as more and more home appliance manufacturers join in, they all need to consider a new question: why, based on what grounds, and what to do?
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