Bosch Cooks Up $150 Million in New Appliance Investments

(Beijing) – The home appliance unit of German engineering giant Bosch will spend more than $150 million to boost its production capacity in China, capitalizing on a growing middle class with a taste for western baked foods and expected strong demand for a new generation of smart devices.

The latest investment by BSH Home Appliances Group in China, its largest single global market, includes $73 million for the expansion of an existing refrigerator factory and $88 million for an oven plant, both in the city of Chuzhou in the country’s eastern Anhui province.

The refrigerator project, slated for completion next year, will triple the company’s current annual production capacity of 1.2 million units and become its largest plant in the country. The facility for large ovens, an appliance type that doesn’t enjoy huge popularity in China, will open by 2020 with an inaugural annual output of 600,000 units.

“As our largest single market in the world, China delivered strong results in the 2016 fiscal year and made a great contribution to the group’s revenue growth. We have been steadily implementing our localization and digitalization strategy, while continuing to increase investment in China,” said BSH Chief Operating Officer Michael Schöllhorn at a ceremony for the new investments last Thursday.

BSH reported record high revenue of 13.1 billion euros ($14.8 billion) last year, with the Greater China region growing by more than 7.7%, the second fastest after India, it said in a statement.

BSH is also hoping to help usher in a new generation of smart appliances, as Beijing pushes for more higher-end manufacturing to offset labor and other rising costs. Most of China’s major appliance makers are working on smart appliances, many of which can connect with the internet.

Chinese giant Haier Group has planned to open 300 “experience stores” in the country to promote its smart-home equipment, which can automatically direct a variety of household gadgets.

Global sales of smart appliances, most equipped with built-in connectivity to communicate with other electronic devices and consumers, totaled around 26 million units last year, with China accounting for nearly half of the total, according to Euromonitor.

“Consumption upgrade is accelerating in China as Chinese consumers seek to improve their quality of life with more powerful appliances or even products in new categories,” said Roland Gerke, chairman of BSH Home Appliances Holding (China).

BSH’s parent, auto parts giant Bosch Group, also counts China as its largest overseas market.

Contact reporter Coco Feng (renkefeng@caixin.com)