In Depth: China’s Appliance-Makers Hunt Emerging Market Growth

[para. 1] As China’s domestic home appliance market reaches saturation, manufacturers are turning their focus to international markets to seek new growth opportunities. Global expansion is now a strategy not only for major brands but also for second- and third-tier manufacturers. Instead of mainly engaging in original equipment manufacturing (OEM) for foreign brands, these companies are increasingly pushing for their own brand recognition abroad.

[para. 2] Zhou Nan from the China's home appliance branch of the CCCME highlights that while Chinese manufacturers traditionally earned more in the domestic market, the export market has become more lucrative over recent years. A notable increase in exports is observed, with China’s home appliance exports reaching $128.6 billion in 2024, marking a fourth consecutive year surpassing the $100 billion mark.

[para. 3] The rise in technical innovations has allowed Chinese appliance companies to penetrate high-end overseas markets, traditionally dominated by brands like Samsung and LG. Despite trade tensions, particularly the China-U.S. trade war, and a global shift towards deglobalization, Chinese manufacturers are strategically setting up production bases in regions such as Southeast Asia, the Middle East, and Latin America to mitigate these challenges.

[para. 4] Companies like TCL Industries Holdings and Hisense Home Appliances are noteworthy players that are leveraging their technological advances to capture premium markets. TCL has emerged as a strong contender with its QD-Mini-LED technology, challenging traditional leaders like Samsung and surpassing LG in the premium TV market share.

[para. 5] Despite facing challenges such as lower brand recognition and increased marketing costs, the strategic entry into sports sponsorships, as demonstrated by Hisense, helps bolster brand visibility and global reach. Such marketing strategies aid in building a favorable international presence.

[para. 6] Chinese companies are increasingly shifting toward original brand manufacturing (OBM), emphasizing selling products under their own names instead of merely engaging in OEM. Companies like Midea exemplify this shift in focus towards expanding overseas with their own branding as a top priority, aiming for a more sustainable business model.

[para. 7] Smaller companies, following the footsteps of larger ones, are also gearing towards OBM to ensure higher profit margins and sustainability. For instance, Royalstar launched its brand in Southeast Asia, a move driven by uncertain relations between Beijing and Washington and the profitability OBM offers.

[para. 8] In response to increased U.S. tariffs on Chinese imports led by policies from U.S. President Donald Trump's administration, Chinese manufacturers are reinforcing their supply chains and exploring overseas production opportunities, particularly in regions with stable ties to China like Southeast Asia.

[para. 9] Emerging markets show significant growth in Chinese home appliance exports, with notable increases in Latin America, ASEAN, and Arab League states. However, the expansion into the Southeast Asian market presents new challenges such as rising costs due to increased demand for local facilities, cultural adjustments, and establishing relations with local governments.

[para. 10] Some Chinese manufacturers are also confronting challenges in Mexico due to recent U.S. tariffs, once a favorable destination for production due to its proximity to the U.S. and low costs. Hisense's strategic investment in Mexico and ongoing efforts to enhance its presence in Southeast Asia underscore the importance of diversification in global operations.

[para. 11] TCL's approach to globalization, which emphasizes localization by empowering regional operations, highlights the importance of adapting strategies to align with local market dynamics, ensuring continued growth and competitiveness in the global landscape.