Suppliers of kitchen appliances in China are implementing various measures to mitigate the effects of the global financial tsunami.
Many makers will be focusing on inexpensive models with basic features. These units are suitable for alternative markets, which are seen as having more sales potential than traditional export destinations.
In a bid to increase product distinctiveness, some large companies are boosting output of multifunction appliances.
Regardless of size, enterprises are now accepting smaller orders. This is a concession to the lower purchasing power of buyers in the different overseas destinations.
Further, the government in China has taken steps to boost domestic sales of the line.
To attract price-sensitive buyers, suppliers are releasing more low-end kitchen appliances. These units have basic designs and features, but are equal in quality to upscale versions.
Inexpensive models account for the bulk of output at most small enterprises. Midsize and large companies, however, are increasingly manufacturing such products as well.
Foshan Shunde Galanz Microwave Electrical Appliance Ltd is offering microwave ovens with mechanical controls, timer functionality, and cooking, heating and defrosting settings. These units are not fitted with components for lightwave cooking.
S-2 Industrial Co. Ltd, which specializes in toaster ovens, is releasing more basic models this year. Such versions do not have the top-mounted hot plate installed in previous products.
In addition, some enterprises are focusing on design innovation to distance themselves from the competition. Most are large suppliers, which allocate a greater portion of sales to R&D.
Zhongshan Donlim Weili Electrical Appliances Co. Ltd, for example, now offers a microwave oven capable of making bread via a dedicated interior compartment and a preset mode. The unit can also perform grilling and convection cooking.
In line with the trend for innovation, a number of large companies are employing more foreign designers and engineers. Such professionals are experienced in creating products that meet trends in their respective markets.
To further prop up sales, makers are boosting shipments to Southeast Asia, Russia, India, Africa and South America. Entering these areas is said to be relatively uncomplicated, as customers do not request models boasting advanced technology or energy-efficient features.
The alternative destinations also impose less-strict safety standards without requiring certification. This enables enterprises to export existing products after minimal modifications to capacity, colors and patterns.
The profits from shipments to these areas, however, are not as high as those from established markets. As such, the shift to the former is seen as a short-term strategy.
In addition, many manufacturers are now imposing smaller MOQ. Zhongshan Donlim Weili, for example, only requires 1,000 to 2,000 units for coffee makers and electric kettles.
Among the China government's measures to promote local sales is the Delivering Appliances to the Countryside program. This is intended to stimulate domestic demand for select kitchen and household electrical products by providing a 13 percent refund for consumers.
While the original arrangement covered washing machines, color TVs and refrigerators, microwave ovens were added in February 2009. The program is slated to run until 2012.
Further, suppliers of coffee and bread makers, and blenders are hopeful they will stay afloat amid the global economic crisis. This is because many consumers have begun cutting down on their costs by eating in, therefore boosting demand for kitchen appliances. As such, one interviewed company increased the price of its coffee makers by 5 to 10 percent.
Hurdles beset industry
Similar to the majority of China's export industries, the kitchen appliances sector is severely affected by the global financial crisis.
Many buyers have decreased the purchase quantities. Others have cancelled orders entirely, often at the last minute, due to unstable demand in their markets. This was especially true in the last two months of 2008. At Shenzhen Adonis Electric Appliance Co. Ltd, one Europe-based buyer sent representatives to the company's Shunde production facility. After the purchase order terms were finalized, however, the customer was not able to make the required deposit.
As a result, exports across China have been substantially reduced. Many suppliers in Guangdong and Zhejiang provinces experienced a year-on-year decline of 40 to 50 percent in 2008 shipments. The former is home to most of China's small makers of kitchen appliances.
During the same period, an estimated 15 percent of the country's manufacturers closed down because of lower orders.
This article "Toaster ovens: Makers seek to hurdle roadblocks" is originally posted in Global Sources.
Contact suppliers in this article
Andefia Industries Limited
Huachang Electrical Appliance Manufacturing Co. Ltd
S-2 Industrial Co Ltd
Zhongshan Donlim Weili Electrical Appliances Co.Ltd
Note: All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.
Disclaimer: All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. We, our affiliates, and our affiliates' respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof) which infringe on any intellectual property or other rights of a third party.