Appliance makers expand overseas footprint

Chen Hui, general manager of AVC Revo, a unit of AVC, highlighted the growing importance of China's manufacturing industry on the global stage in light of its huge consumer market and complete industrial chains.

Chinese household appliance companies have increased their manufacturing capacities overseas and improved their global layout to mitigate the negative impacts of tariff barriers and reduce costs since the start of trade frictions between China and the US, Chen said.

Chinese home appliance maker Hisense Group has accelerated steps to expand its business-to-business segment in overseas markets and build brands in its portfolio. That shows its determination to drive the transformation and upgrading of intelligent manufacturing, which will become an important direction of strategic development for the company, industry experts said.

Revenue from overseas markets will make up more than half of the company's total within three years, said Jia Shaoqian, chairman and president of Hisense, in an earlier interview. The company's revenue stood at 183.5 billion yuan in 2022, up 8.8 percent year-on-year. Its overseas revenue was 75.74 billion yuan, accounting for 41.3 percent of the group's total revenue.

Jia said the company has set up 23 R&D centers and 31 industrial parks and production centers across the globe. It also has 66 overseas branches in Europe, the Americas, Africa, the Middle East, Australia and Southeast Asia.

Hisense has expanded the production capacity of its Mexican factory, given the complex trade environment, with about 8.5 million televisions made each year.

It purchased Sharp's TV business in Mexico and acquired Sharp America's TV line for the North and South American markets in 2015.The company acquired a 95 percent stake in Japan's Toshiba Visual Solutions Corp in 2017, as part of its efforts to expand globally. In August 2018, it completed the acquisition of Slovenian appliances producer Gorenje.

The company has also announced expansion plans for the Indian market, which will include setting up a local manufacturing plant and expanding its product portfolio.

"To meet the growing demand for our range of televisions, we are ramping up our local manufacturing capabilities and will set up a TV manufacturing plant with a 2-million-unit capacity within the next two years," said Rishi Tandon, chief operating officer of Hisense India.

Hisense ranked second in global television shipments in 2022, an increase of 16.1 percent year-on-year, according to market research company Omdia. The company has boosted its brand awareness in recent years via sponsorship of major world-class sporting events, including prominent soccer tournaments such as the 2022 FIFA World Cup in Qatar and UEFA Euro 2020.

As part of a major trend, appliance makers are stepping up their operations in the global market to improve competitiveness and foster a new growth engine for their long-term development, said Jie Meijuan, general manager of the consumer electronics big data department of AVC.

Jie said globalization is both an opportunity and a challenge for Chinese home appliance manufacturers, and it will promote the sector's high-quality transformation and upgrading.

"Building a sound global industrial chain and enhancing operational capacity in the overseas market will help Chinese home appliance companies utilize global resources, reduce costs and improve management efficiency," Jie said.

Establishing global R&D centers will also help Chinese enterprises gain innovation advantages, master new technologies and obtain a greater voice in increasingly fierce international competition, she added.

Last month, Chinese home appliance maker Midea Group held a groundbreaking ceremony for a new plant in Brazil as part of the company's latest move to expand its footprint in the country.

The new factory will enhance Midea's competitiveness in the local market, the company said, adding it has great confidence in the Brazilian market and will further increase its investment there.

With a total investment of more than 700 million yuan, the new factory is expected to open in July 2024. It covers over 70,000 square meters, with an annual production capacity of 1.3 million units.

"In the past, most Chinese enterprises adopted the OEM model, but nowadays they tend to build their own brands to participate in global competition," said Liang Zhenpeng, an independent consumer electronics analyst. In the original equipment manufacturer model, companies often make a product to be sold by another company that uses its own brand name on the product.

Liang said growth rates in the domestic home appliance market are dropping, so major players should accelerate steps to expand in overseas markets such as Southeast Asia, South America, Africa and other emerging markets as they continue to show huge growth potential in low-, medium- and high-end products.

Zhang Qizi, deputy director of the Institute of Industrial Economics at the Chinese Academy of Social Sciences, said Chinese enterprises should work to achieve breakthroughs in key technologies through their own innovation and promote the integration of new-generation information technologies and intelligent manufacturing with industrial supply chains.