China remains the world’s fastest growing large economy, and foreign investors and marketers continue to scope the country for new ways into the growing wallets of Chinese consumers. The truth, of course, is that China is a tough market anyway, and none perhaps is tougher than the white goods market. Tough, because the competition is so fierce, margins so tight and, until recently, the available market was shrinking.
The rural rebate scheme for reduced price goods to rural consumers has made the available market a lot bigger though, over the past few years. Recent estimates of the 2009 Chinese New Year (CNY) retail figures show that the scheme is beginning to have a significant effect. Official estimates for the CNY period show sales of household electric appliances grew by 17.8% over the same period in 2008.
Margins may be tight, but when volume sales are surging ahead like this, the retailers and manufacturers continue to have the opportunity to make a profit, and this is keeping the overall market very much alive. Although the white goods manufacturing industry is in need of its ongoing process of consolidation, this could provide new opportunities for outside investors looking to buy a stake in the market.
Despite the strong competition, many opportunities lie in developing new products to suit the new consumer groups emerging in China. Not only are the richer Chinese moving up the value ladder, but so are many first time consumers in provincial towns and rural areas, across a wide range of lifestyles in each region, each group with its own product and service needs, creating a much more diverse market environment than before.
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