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casting a wide net and going overseas, how does haier smart home survive the inventory cycle?

author丨tian xiao editor丨sai ke

it is an indisputable fact that refrigerators, air conditioners and washing machines are not selling well.

under the double blow of cooling home buying enthusiasm and sluggish income expectations, white goods brands are struggling to survive. however, haier smart home, as the "big brother" of the industry, has held on.

the latest semi-annual report shows that haier smart home achieved revenue of 135.62 billion yuan in the first half of the year, a year-on-year increase of 3.0%; net profit attributable to the parent company was 10.42 billion yuan, a year-on-year increase of 16.3%; net profit attributable to the parent company after deducting non-recurring items reached 10.161 billion yuan. in such a difficult market environment, such performance is undoubtedly a shot in the arm.

in recent years, haier smart home has been actively seeking change, and has tried multiple brands, high-end products, and overseas expansion. so, under the background of general pressure in the industry, what factors have supported haier smart home to resist the market downturn and even achieve counter-trend growth? let's find out.

Part.1

disadvantages of multi-brand strategy loom

according to data from aowei cloud network, the domestic white goods market retail sales in the first half of 2024 was 231.9 billion yuan, a year-on-year decrease of 7.0%, and the retail volume was 77.74 million units, a year-on-year decrease of 3.6%. the 618 online market retail volume was 22.71 million units, a year-on-year increase of 5.2%, and the retail sales was 49 billion yuan, a year-on-year decrease of 2.5%.

the data undoubtedly shows that the domestic white goods market has entered a slow-growth inventory cycle.

in order to survive in the saturated market, haier smart home has a clear strategy: using a differentiated multi-brand strategy to tap the potential of each segment.

haier, the "ace" of the mass consumer market, has ranked first in the retail volume of refrigerators and washing machines for 16 and 15 consecutive years respectively since 2008; casarte, which focuses on the high-end home appliance market, has increased its sales volume 13 times in 7 years, and has ranked first in the high-end market in 2023; leader, which grasps the needs of young users, achieved a 31% increase in retail sales in the first half of the year.

while maintaining its basic market share, haier smart home is facing a vast demand for replacement. its high-end, innovative, and price-performance-oriented sub-brands have obviously given it a great sense of certainty.

however, the "cast a wide net" strategy is not without its drawbacks.

on the one hand, the huge investment in the brand cultivation period requires a sufficient "family foundation". in the contraction period when "saving money" is needed, it will inevitably bring more profit pressure.

in the first half of 2024, haier smart home's sales expenses were 18.688 billion yuan, and the sales expense rate reached 13.8%. in 2023, haier smart home's sales expenses were 40.978 billion yuan, and the proportion of total revenue once reached 15.67%. this figure far exceeds other brands in the same industry.

on the same day the financial report was released, haier smart home also announced that it plans to invest in the construction of a 5 million unit air-conditioning project in the sco economic demonstration zone in jiaozhou city, qingdao through its subsidiary qingdao haier hvac equipment technology co., ltd., with an estimated total investment of 2.494 billion yuan.

when will the continuous investment in sales, technology and other aspects turn into tangible profit income? for haier smart home, everything is still unknown.

on the other hand, although the sub-brands launched by haier smart home have already established a certain market share, as new entrants, it still takes a long time to steadily penetrate.

in the first half of 2024 financial report, haier smart home no longer mentioned the revenue scale and overall growth rate of casarte, the fastest growing sub-brand in recent years. we don't know what the considerations behind it are, but it is obvious that they still have a long way to go to reach the level of haier, a national brand that is well-known to people.

Part.2

overseas revenue has entered a bottleneck period

another highlight of haier smart home in the first half of the year was its outstanding overseas revenue.

the financial report shows that in the first half of 2024, haier smart home's overseas revenue was 70.824 billion yuan, a year-on-year increase of 3.7%, accounting for more than 50% of the total revenue, and has become the "money-making half" of haier smart home.

when it comes to going overseas, haier smart home started early and has a steady strategy. over a span of more than 20 years, it has carried out large-scale acquisitions overseas, step by step taking in parts of the business of japan's sanyo electric, the home appliance business of general electric of the united states, fisher & paykel, candy and many other brands, gradually making a name for itself overseas and becoming a model for home appliances going overseas.

according to euromonitor data, in 2023, haier smart home ranked first in retail volume in the asian market among the major regional home appliance markets in the world, with a market share of 26%; ranked second in the americas, with a market share of 15.8%; ranked first in australia and new zealand, with a market share of 14.6%; and ranked fourth in europe, with a market share of 8.8%.

haier smart home has performed particularly well in overseas emerging markets. in the first half of the year, its washing machines ranked first in market share in 10 countries including australia, new zealand and vietnam, and its air conditioners ranked first in market share in pakistan and malaysia. the upgrade of its water appliances drove overseas revenue growth of more than 20%.

however, when it comes to specific segments, haier smart home has experienced sluggish growth in its main overseas markets such as the united states and europe, and its gross profit has also been declining year by year.

in the first half of 2024, the us business, which accounts for more than half of haier smart home's overseas business, had a revenue of 39.079 billion. compared with the semi-annual report released by haier smart home in the first half of 2023, haier's revenue in the us market at that time was 39.133 billion. it can be seen that haier smart home has stagnated slightly in the us market. in the european market, which has the second largest overseas share, haier smart home's revenue in 2024 was 14.505 billion. although it increased by 9.2% year-on-year, it also showed a slowing trend compared with last year's 29.6% growth. in addition, south asia, haier smart home's third largest overseas market, had a revenue of 6.542 billion in the first half of 2024, a year-on-year increase of 9.9%, which was also a decline compared with the year-on-year growth rate of 23.5% in the first half of 2023.

as the penetration rate of home appliances in the european and american markets is high, the market is saturated, and the growth space for new users is limited, haier smart home, as an "outsider", seems to have entered a bottleneck period of development. the supply chain, brand awareness, and uncertainty in the economic environment are all difficult hurdles for haier smart home to overcome. at a time when global economic volatility is increasing, it is facing more severe challenges both at home and abroad.

Part.3

urgent need to solve the revenue growth problem

in fact, behind haier smart home's growing financial report, one can carefully see some hidden dangers.

the slowdown in growth is an indisputable fact. compared with past performance, from 2021 to the first half of 2024, haier smart home's revenue in each first half of the year was 111.62 billion, 121.86 billion, 131.63 billion, and 135.62 billion, respectively, with year-on-year growth of 16.6%, 9.2%, 8%, and 3%, respectively, showing a gradual downward trend.

in haier smart home's 2023 financial report, its refrigerator, air conditioner, and kitchen appliance product revenues were 81.641 billion, 45.66 billion, and 41.589 billion, respectively, up 5.16%, 13.98%, and 7.42% year-on-year, respectively. among them, the revenue growth rate of haier smart home's revenue pillar refrigerator products also lagged behind the market.

in this regard, haier smart home has mainly done two things.

the first is cost reduction and efficiency improvement. the financial report pointed out that the company has achieved immediate response to customer needs through end-to-end data sharing of sales, supply, production and logistics shipping plans, and the domestic market customers have optimized the cycle from placing market orders to goods receipt by 12%. in terms of procurement cost reduction, ai technology and ocr technology are integrated to automatically identify cost accounting factors, build cost accounting models, and realize one-click price comparison of materials. the company has established price comparison models for more than 100 materials, and the commonality rate of parts has increased by 13%.

the second is to accelerate the high-end transformation. for example, in terms of channel layout and expansion, haier smart home still adheres to the high-end front transformation strategy, expanding the breadth and depth of cooperation with cabinet manufacturers and home improvement companies; in product research and development, it continues to launch high-end products such as the new generation of oven stove series, profile series dishwashers and chewable ice makers.

entering a new cycle of slow growth, the market is like a silent forest, with mysteries hidden under the surface calm. the situation is unpredictable, and for any company, past accumulation alone cannot guarantee that it will safely pass the test of every season.

today, haier smart home must not only carefully protect the existing achievements, but also continue to work hard and prepare for the future. on the one hand, cultivating inner strength is like accumulating nutrients in the soil. only when the roots are stable can they not be shaken when the wind and rain come. on the other hand, strategic reserves mean making adequate preparations in resource integration and strategic layout to ensure that they can go further and more steadily in the fiercely competitive market.