Adding value to life in quarantine

Galanz, a Chinese home appliances maker, is stepping up its go-global push as the COVID-19 outbreak has increased overseas demand for its refrigerators, microwave ovens and other kitchen products.

Leung Chiu Yin, chairman and president of Galanz, said despite the impact of the epidemic on the consumer goods sector, the company's orders have increased. "Orders from foreign markets have taken up some of the production capacity designated for the domestic market, a rare phenomenon."

Galanz's sales revenue in the North American market, for instance, jumped 20 percent year-on-year in the first four months of this year. During this period, sales of its refrigerators and microwave ovens showed the most impressive growth, surging more than 100 percent and 70 percent year-on-year respectively.

According to Leung, orders for the Galanz brand of refrigerators have piled up and supplies would go on through the third quarter of this year.

To meet the fast-growing demand, the company, which is based in Foshan, Guangdong province, has built a new plant in 50 days. The first phase of its Industry 4.0 production base in the Shunde district of Foshan began operations in late April.

With four new smart manufacturing lines, the base, which is capable of producing a microwave oven in 6.7 seconds, will have a production capacity of 11 million microwave ovens annually, Galanz said.

With an investment of more than 10 billion yuan ($1.41 billion), the base will deploy industrial robots in its four production lines, to boost overall production efficiency.

From mid-February to late April, Galanz executives such as Rachel Zhuang, in charge of marketing in North America, and her colleagues have stayed in the United States, to help local supermarkets and other retailers predict and meet demand for home appliances.

Zhuang said due to the outbreak, US consumers have to store food for more than one to two weeks, which has increased demand for refrigerators.

"Many people need to go through self-quarantine at home, so they prefer to buy a new refrigerator to store food. We quickly noticed the trend and stocked enough products to meet demand, which helped our local refrigerator sales surge by 50 percent in a short time," Zhuang said.

Also, as more consumers need to cook at home or heat up take-away food, demand for larger, multi-function microwave ovens surged. "Galanz's products for the US market are mainly designed for heating, baking and deep-frying food, so they were warmly welcomed," Zhuang said.

Galanz is not alone. Amid the outbreak, a string of Chinese companies have witnessed surging demand for their home appliances. Hua Chuang Securities said in a research note that amid the outbreak, some meatpacking plants in the US were shut down. As the weather gets hotter and people stay at home for a longer time, demand for refrigerators is expected to spike further.

"About 70 percent of refrigerators come from China where most manufacturers have resumed production. And the rest are from overseas countries where production capacity is negatively impacted by the outbreak," Hua Chuang Securities said in its note.

Li Wenjie, who analyzes the home appliances market for Chinese e-commerce platform JD, said the outbreak will change consumer preferences and shopping habits. Chinese manufacturers have to allocate more resources to better exploit the emerging opportunities to increase sales and market share.

Unsurprisingly, Galanz is speeding in that direction, having hired more than 3,200 university graduates. About 1,000 of them will be positioned in foreign countries and regions to help the company expand its presence in the global home appliances market.

Currently, over 70 percent of Galanz's revenue comes from overseas markets. The company has established branches in the US, the United Kingdom, Japan, Chile, Russia and other countries.

The 1,000 new employees posted overseas will help Galanz to better rely on localized operations, research and development. They will also help exploit the advantages of the company's complete industry supply chain, in order to offer tailor-made products to each market.

"The explosive demand amid the epidemic can not guarantee long-term growth. But it will reshape the way people work, live and it will spur consumers' demand for home appliances that facilitates healthy lifestyles, thus maintaining a sound growth momentum for the global home appliance industry," Zhuang said.

Galanz started exporting microwave ovens to developed markets in 1990s, with the US, France, and Germany being the "bridgeheads".

Asked about Galanz's success abroad, Leung said: "Integrity is a business card for Galanz to explore the world."

According to him, amid stiff competition, intense uncertainty is inevitable. But the market only believes in strength, not tears－it respects only the principles of division of labor and cooperation.

This lesson he and the company learned from an overseas deal in 2003. Back then, Galanz had to deliver 3,000 microwave ovens to France. But, due to its suppliers' mistakes, the goods faced a possible five-day delay in reaching the customer.

In order to ensure on-time delivery, Galanz decided to ship the cargo to Europe by air regardless of the higher costs. At that time, the cost of shipping one microwave oven by air was equivalent to five times its sales price.

Looking back, Leung said Galanz recognized it must deliver on its promises. "We must act with the highest standards, constantly surpass ourselves and exceed customer expectations."