Portable power generators: Price cuts, product upgrades keep line afloat

China suppliers of portable power generators are adopting both price- and product-based differentiation strategies under efforts to revive exports.

Revenue from outbound shipments plummeted 30 percent in 2H08 over the same period in 2007 whereas the industry had previously posted gains that averaged 20 percent annually.

To attract orders, companies have implemented price reductions of as much as 15 percent over the past several months, an endeavor facilitated by lower spending on materials. Quotes are now actually back at 2007 levels, with no sign of moving in either direction barring sudden or signifi cant fl uctuation in material costs and the yuan-dollar exchange rate.

Ranging from 0.65 to 10kW in output, China-made portable power generators are between $50 and $1,000, although some models are priced higher.

Gasoline versions from 0.65 to 2kW go for $50 to $25 while 2 to 5kW units start at $200 and reach $600. Diesel generators with 6 to 10kW power are from $600 to $1,200.

In line with pricing adjustments, makers reevaluated payment schemes and many now favor TT in lieu of L/Cs while some lowered deposit rates, especially for longtime customers and credit-worthy clients.

Suppliers also reduced the minimum order requirement from one TEU to 30 to 50 units.

As regards product development, companies are directing efforts toward low-end and midrange designs, which are the industry's mainstream. Since recent enhancements emphasized safety and overall performance, most models now have overcurrent protection and are better insulated.

To ensure electrical safety, Chongqing HuanSong Industries (Group) Co. Ltd installed gauges with alarms that monitor oil level into its generators.

To address growing environmental awareness, makers are improving fuel effi ciency and complying with international emission standards such as Euro II, EEC, EPA and CARB.

Mindong Yanan Electrical Machine Co. Ltd has released a power generator that consumes 15 to 20 percent less fuel. The model is priced 10 percent higher than other designs from the manufacturer.

Performance upgrades are also geared toward reliability. Zhejiang Wanhao Machine Science and Technology Co. Ltd, for example, offers a generator that can run continuously for 16 hours.

Chongqing HuanSong's 3kW 3GF-3D model, on the other hand, is designed to operate up to 13 hours.

Supplier base shrinking

Slowing exports have driven several China suppliers to cease portable power generator production or exit the industry entirely. In the city of Taizhou in Zhejiang province alone, about fi ve large makers have been forced to do so in recent months.

As such, the country now has roughly 500 makers in the line. The largest concentration of companies is in Zhejiang, which is also the leading exporting hub. The province's selection consists of both diesel and gasoline models. Companies in Jiangsu offer the two categories as well.

Suppliers in Fujian, on the other hand, focus on diesel powered models. The province is actually the first to manufacture the line in China.

Backed by their extensive experience in motorcycle production, Chongqing companies mostly make gasoline generators.

China turns out roughly 150 million portable power generators annually, about 80 percent of which runs on gasoline.

The industry is export-oriented, with more than 80 percent of output sent overseas. Value has been estimated at $2.5 billion.

The US remains as the largest destination, although makers are pursuing alternatives such as Africa and South Asia.

Contact suppliers in this article

Chongqing HuanSong Industries (Group) Co., Ltd
Fuzhou Hailin Machinery Co. Ltd
Mindong Yanan Electrical Machine Co. Ltd
Mow Lin Electric Co Ltd
Shanghai World Power Machinery Co. Ltd
Whally Min Company Limited
Zhejiang Wanhao Machine Science and Technology 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.

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