Global orders have skyrocketed: refrigerator freezer exports have been scheduled for the first quarter of next year.

SMM News: worry about too many orders, too busy to work overtime, plan to shorten the Spring Festival holiday …. It is hard to imagine that this is a true portrayal of the current export market of refrigerator freezers, which has been growing at a low speed over the past years. In fact, it is not too much to describe today's refrigerator freezer export market as unusually hot. Industry online monitoring data show that since June 2020, refrigerator freezer exports have shown a rapid growth trend, with an increase of more than 20% over the same period last year, while the growth rate has exceeded 60% in August and September, ushering in a long-lost blowout.

The monthly export scale and growth trend of China's refrigerators and freezers in 2020 (10,000 units)

Orders collapsed at the beginning of the year, but now they are full, and the exit of the refrigerator freezer is hot and cold.

As the main representative of white goods, refrigerators and freezers are the leading export products of household appliances in China. However, in the initial stage, under the influence of the epidemic, enterprises stopped production and cancelled orders, so the export situation in the first quarter was poor, showing negative growth.

As the novel coronavirus epidemic broke out around the world, most countries began to implement strict blockade measures in mid-late March to contain the spread of the epidemic, and people were quarantined at home and increased their willingness to hoard goods, leading to a sharp increase in demand for freezers. The novel coronavirus epidemic in China mainly broke out and was prevented and controlled in the first quarter. With the unsealing of Wuhan in April, Chinese enterprises with good production capacity welcomed new orders, and enterprises also increased their production efforts. As a result, refrigerator freezer exports increased positively in the second quarter.

In the third quarter, China's domestic enterprises have basically resumed production, and most of the factory production is full, most of which are export-oriented, and the delivery time is also being extended. Due to the repeated effects of the epidemic, overseas supply chains are still facing challenges, and the recovery of factories in various countries is slightly better than before, but it is still not very satisfactory.

According to industry online, production in Indonesia, Turkey and other countries is relatively good. The United States has only restored nearly 90% of its production capacity since August. Italy has been full of twists and turns, and production in other European regions such as Russia has not been able to fully recover. India's performance was dismal throughout the third quarter. As a result, the continuous concentration of global orders to China and the rapid growth of refrigerator freezer exports have directly led to the fact that exporters are still unable to meet demand at full capacity this year, and orders will not be available until the first quarter of next year. However, at the same time, due to the poor recovery of overseas production, some enterprises, including Haier, which export parts to overseas assembly plants in the form of SDK or CDK, have been affected.

Comparison of export scale and trend of China's refrigerators and freezers in the first three quarters of 2018-2020 (10,000 units)

The export of refrigerator freezers to Europe and the United States increased significantly in the first three quarters.

The global "home economy" under the epidemic has brought export dividends to China's home appliance industry. From the perspective of export regions, full orders are mainly due to the rapid rebound in demand in Europe, the United States and other places.

Europe: in the past two years, European countries have come out of the crisis and become the largest refrigerator market exported by China in the world. Industry online statistics show that exports to Europe exceeded 7 million units in the third quarter, accounting for nearly 40 percent of China's total exports of refrigerators and freezers, an increase of 58.8 percent over the same period last year.

Judging from the monthly situation, it has changed from negative to positive year-on-year since June, and the year-on-year growth in August and September has exceeded 65%. In terms of regional segmentation, the UK, France and Germany are the largest refrigerator freezer market in Europe, with a total market size of 3 million units in the three countries in the third quarter, accounting for 43 per cent of the European market.

The new round of epidemic prevention measures in Europe has brought more uncertainty to the economic recovery, and the second blockade by many European countries is approaching, but many governments have hinted that the blockade may be extended, and "living at home" and "working from home" have brought a sustained demand for storage. For this year's Christmas shopping plan, in Germany, for example, 85% of Germans have no plans to cut spending, 52% of Germans increased their online shopping over the previous year, and 65% of Germans said they would do Christmas shopping online. Therefore, the European refrigerator freezer market demand is expected to continue to improve.

In addition to the European Commission's announcement of the new energy labelling requirements under the COVID-19 epidemic, the regulation (EU) 2019 / 2016 stipulates the energy efficiency labelling requirements for refrigeration equipment, which will be implemented on March 1, 2021. The revision of energy efficiency standards is expected to phase out 40% of the models on the market, and the proportion of frequency conversion products in the European market will continue to increase in the future, which is also a new opportunity for Chinese manufacturers.

The Americas: the Americas is mainly supported by the US market. The United States is the largest exporter of Chinese refrigerators and freezers in the world. In the third quarter, the export volume to the United States was 4.84 million, accounting for 24.6% of the global export volume and 72.6% of the market size in the Americas. The American market grew by nearly 90% in the third quarter compared with the same period last year. On the one hand, due to the impact of last year's Sino-US trade war and the imposition of tariffs, the scale of exports in 2019 was relatively low. On the other hand, after the epidemic, government subsidies, increased funds available to Americans for non-daily consumption, the decline in new home prices and record low loan rates led to an increase in demand for home purchase, as well as an increase in residents' demand for food storage. This has driven the growth of demand for refrigerators and freezers, coupled with the comprehensive situation in which overseas production is blocked, leading to the rapid growth of China's refrigerator freezer exports to the United States.

At a time when the epidemic is making a comeback, many states in the United States have once again tightened their epidemic prevention policy. under the circumstances of continuous home isolation and huge storage demand, China's exports to the United States declined year-on-year only in February, and then continued to rise compared with the same period last year. There has been a rapid growth since June, with an increase of more than 60% in a single month and 146% in September.

Comparison of the scale of exports by continent in the first three quarters of China's refrigerator freezers in 2020 (10,000 units)

Asia: the Asian region is the third largest market for China's refrigerator freezer exports after Europe and America, accounting for 21% of the global scale of exports. With the repair of the economy and the pick-up of demand, the recovery rate of Asian exports is gradually accelerating, with double-digit growth in the third quarter. In September, the export volume was 1.26 million, an increase of 36.7% over the same period last year, and the overall performance was relatively satisfactory.

In addition, on November 15, 2020, the Regional Comprehensive Economic Partnership Agreement ((RCEP)) was formally signed by the ten ASEAN countries, South Korea, Japan, Australia, New Zealand and China. According to the RCEP agreement, all 15 member states are required to undertake to reduce tariffs, open markets and reduce standard barriers. If the agreement is implemented, it will greatly reduce the circulation and operating costs among countries, become the "integrator" of regional economic and trade rules, promote the expansion and upgrading of the regional consumer market, and promote the further development of the industrial chain, supply chain and value chain in the region. Therefore, RCEP has created a better regional business environment and created significant market opportunities for the export of Chinese household appliance brands.

In the first three quarters of 2020, China exported more than 7.3 million refrigerators from RECP member countries, accounting for nearly 16% of the global share of exports. The implementation of the agreement will bring some room for improvement. In addition, it will be of great significance to the future global production layout of Chinese enterprises and the transfer of some low-end manufacturing industry chains.

Comparison of the year-on-year trend of the export scale of China's refrigerator freezers from January to September in 2020

As orders soar, enterprises step up their preparations for war.

With the stable domestic epidemic situation and a sharp rise in refrigerator freezer exports, various enterprises have stepped up production. Compared with the worry about insufficient orders, overstocking and destruction of orders in the first half of the year, enterprises are more worried about too many orders and unable to work overtime, and exports are growing rapidly. In December, Europe and the United States will usher in the Christmas consumption season, the demand for refrigerators is expected to only increase, Europe, the United States, Australia and other places are still the main areas of export growth. Demand in Japan, South Korea and some parts of Southeast Asia has rebounded slightly recently, but there are also some countries whose production has returned to its pre-epidemic state, a serious economic downturn and trade barriers have led to a large decline in China's exports, so the situation should not be blindly optimistic.

Although exports have picked up, rising costs have also put pressure on companies, with manufacturers suffering between soaring orders and soaring costs. Not only the price of raw materials, the appreciation of the RMB, but also rent, labor and logistics costs are also rising, export containers, warehouses are also very tight. Behind the full orders, Chinese enterprises need to overcome the difficulties with foreign customers. In any case, companies are well prepared to meet the challenges. By increasing production capacity, innovating technology, widening channels, and actively promoting intelligent manufacturing, enterprises can re-shorten the order cycle and increase profits.

According to the current industry online data, China's overseas orders rose quarter by quarter in the first three quarters of this year, falling 0.9% in the first quarter compared with the same period last year, 12.5% in the second quarter and 49.2% in the third quarter, and the orders of all enterprises remained sufficient in the fourth quarter. From the enterprise's current orders-on-hand, take Midea as an example, the delivery time of its refrigerator has reached 180 days, and the delivery time of freezer has also reached 90 days. Affected by the high growth trend of the industry before the end of the year, the industry online expects the export of refrigerators and freezers to reach a cumulative growth of 30% in fiscal year 2020.

It is reported that the surge in orders will continue until the Spring Festival next year, and the growth momentum of some enterprises will continue until the first half of 2021, and many enterprises already plan to shorten the Spring Festival holiday to meet export demand. In this case, the upstream enterprises of the refrigerator, including the supply chain enterprises such as compressors, foaming materials and other parts, have also responded quickly, providing great support for the refrigerator freezer export enterprises.

The situation in the first half of the year is optimistic, but the situation in the second half of the year remains to be seen, and the global demand may also change with the changes in vaccine, exchange rate, economy and other situations. While paying close attention to production, Chinese refrigerator and freezer manufacturers also need to pay attention to them at any time and adjust relevant policies in a timely manner.