中国冰箱行业战略报告

1、CONFIDENTIALIndustry Situation Analysis: Refrigeratoraaaaaa ELECTRONICS CHINA (aaaaaa China)This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from McKinsey &

2、; Company. This material was used by McKinsey & Company during an oral presentation; it is not a complete record of the discussion.aaaaaa010807BJ-refrigeratorKEY MESSAGESRefrigerator market is expected to grow at 4.6% annually from RMB 21 billion in 2000 to RMB 26 billion in 2005. Although growi

3、ng at a rate as high as 31.1%, side-by-side refrigerator market is expected to remain very limited in the next 5 yearsIn general, industry profitability for refrigerator is moderate. However, side-by-side refrigerators enjoy double digit return on salesExcept side-by-side refrigerator, refrigerator

4、market is led by local players. However, there are opportunities for MNCs to successfully build up their position by focusing on mid-to-high-end segmentsThe refrigerator industry is relatively “low-tech” and has low entry barriers. Entry into WTO is not expected to have direct huge impact on the com

5、petitive environmentWith market shares around 3 to 4%, aaaaaa is moderately positioned in refrigerator market. 1aaaaaa010807BJ-refrigeratorMARKET ASSESSMENTMarket assessmentSupply (competitor) analysisDemand (customer)analysisOverall environment analysisMarket definition2aaaaaa010807BJ-refrigeratorM

6、ARKET ASSESSMENTSupply (competitor) analysisDemand (customer)analysisOverall environment analysisMarket definitionEvaluation criteria, weight and rating Assessment of market attractiveness Market assessmentProduct/service definitionRelevant regulatory environment and trends Relevant technological en

7、vironment and trends Market size and growth rateKey buying factorsDistribution channel structureMarket share by competitorIndustry profitability or economics3aaaaaa010807BJ-refrigeratorMARKET DEFINITIONProduct/service definitionSupply (competitor) analysisDemand (customer)analysisOverall environment

8、 analysisMarket definitionMarket assessment4aaaaaa010807BJ-refrigeratorPRODUCT SCOPE WHITE GOODSProduct groupProduct categoryAir conditioner Washing machineWhite goodsMicrowave Packaged A/CCentral A/C*Side-by-sideRefrigerator Product subcategories*Used by residentials and small businesses5aaaaaa0108

9、07BJ-refrigeratorMARKET DEFINITIONSupply (competitor) analysisDemand (customer)analysisOverall environment analysisMarket definitionMarket assessmentRelevant regulatory environment and trends Relevant technological environment and trends 6aaaaaa010807BJ-refrigeratorLOW-END REFRIGERATOR MARKET IS LIK

10、ELY TO BE DOMINATED BY LOCAL COMPETITORS. MNCS COULD SUCCEED IN THE MID-TO-HIGH-END NICHE MARKETSRegulatoryTrends/issuesImplications Market has been fairly open and will remain soMost leading MNC players are already in China and have localized their production and sourcingTechnologicalIn general, te

11、chnologies for refrigerators are not very complicated, esp. for low-end productsTechnology trend is to focus on digitization, artificial intelligence and environmental friendlinessEntry to WTO is not expected to have huge direct impact on current competitive environmentThe market is likely to be dom

12、inated by local players who are mostly not as strong in technology as MNC players but stronger in channel and sales capabilities, especially in the low-end segmentsMNC players are likely to succeed by being niche players and focusing on mid-to-high-end segmentsCompetition in product innovation is li

13、kely to focus on customization and localization7aaaaaa010807BJ-refrigeratorMARKET DEFINITIONSupply (competitor) analysisDemand (customer)analysisOverall environment analysisMarket definitionMarket assessmentMarket size and growth rateKey buying factorsDistribution channel structure8aaaaaa010807BJ-re

14、frigeratorALTHOUGH aaaaaaOND LARGEST MARKET AMONG WHITE GOODS, REFRIGERATOR MARKET GROWTH WILL BE MODESTSource: GFK, SINO-MR, Light Industry Information Center, aaaaaa, field interviews, McKinsey analysis21,05621,96422,92423,90424,92325,9752000Side-by-sideNon-side-by-side refrigerators20012002200320

15、042005CAGR(00-05)Percent21,13022,06023,05024,07025,14026,260Key driversRationale or assumptionsReplace-mentSince the penetration rate in China is high (80%), particularly in major cities (100%), majority of the demand for non-side-by-side refrigerators will come from replacement purchaseIncome growt

16、hIncrease in average disposable income drives demand for mid-to-large capacity and mid-to-high end refrigeratorsAverage priceDrops at 4% p.a.74961261662172854.64.431.1Refrigerator market size and growth RMB millions, percentUnits sold(non-side-by-side)millionsAverage sellingprice(non-side-by-side)9.

17、414.313.112.111.110.21,8401,9101,9902,0702,1602,2508.8-4.09aaaaaa010807BJ-refrigeratorTHE MARKET IS VERY SATIATEDReplacement is likely to be the key driver for future demandSource: China Statistics YearbookPenetration rate in ChinaTier 1Tier 2Tier 3Whole China103%101%87%80%10aaaaaa010807BJ-refrigera

18、torMID-TO-LARGE CAPACITY REFRIGERATORS HAVE BEEN CONSUMERs FAVORITE CHOICESource: SINO-MR, GfK 300LCAGR(00-05)Percent8.69.19.4-18.44.5-22.54.9-5.117.38.7-18.4-18.411aaaaaa010807BJ-refrigeratorSIDE-BY-SIDE REFRIGERATOR MARKET WILL BE OF VERY LIMITED SIZE, DESPITE ITS HIGH GROWTH RATERMB millions, per

19、cent217.0166.0126.096.074.0285200020012002200320042005CAGR(00-05)Percent 31.1Key driversRationale or assumptionsLiving spaceOnly households with kitchens over 30m2* are assumed to possibly consider side-by side refrigeratorsHousehold incomeOnly households with average annual income over RMB500,000 a

20、re assumed to possibly consider side-by-side refrigeratorsLifestyleMost wealthy people have maids who do grocery shopping everyday and they are not in high demand for super large refrigeratorsPriceDrops at 2% p.a.* Construction areaSource: Zhongxi Trading Co., aaaaaa, Lufthansa Department Store, Sci

21、-tech Department Store, YYSC, team analysis3,5004,6806,2608,38011,210 15,00033.8Units soldSide-by-side refrigeratormarket size and growthAverage selling price21.020.620.219.819.419.0-2.0Key customer groups Chinese educated overseas Expatriates Wealthy local peopleKey markets Beijing Shanghai Guangzh

22、ou Shenzhen Shenyang12aaaaaa010807BJ-refrigeratorPRICE IS THE DOMINANT FACTOR FOR CONSUMERS NON-SIDE-BY-SIDE REFRIGERATOR CHOICE WHILE BRAND AWARENESS IS MORE IMPORTANT FOR SIDE-BY-SIDE REFRIGERATORFactors to consider when making non-side-by-side refrigerator purchasing decisionsPercent of responden

23、tsSource: IMI, SCSS2000, interview47282623191714141074Brand imagePriceCapacityEnergy-savingExterior designLow noiseNo frostAfter-sales serviceNon-CFCsFreezer capacityOtherKBFs for side by side refrigeratorSoft commercials, such as putting a side-by-side refrigerator in the club of high-end residenti

24、al area is very effective in increasing the awarenessMany potential customers are not fully aware of the existence of side-by-side refrigerators in China marketWhen making purchase decisions, the key factors that customers consider are brand, design and featureMr.Gu Yong GuyManagerZXHY Trading Co.13

25、aaaaaa010807BJ-refrigeratorDIRECT COOLING IS STILL THE PREFERRED CHOICE ACROSS THE MARKETPercentSource: SINO-MR; GfK, field interview 96.095.795.488.786.385.5North West East China Although indirect-cooling refrigerator is frost-free, it tends to dry up the food. As a result, it is particularly unpop

26、ular in less humid areas such as Northern China North East North ChinaSouth West Central West Market share of direct cooling refrigerators in major cities, 200014aaaaaa010807BJ-refrigeratorCHANNEL STRUCTURE FOR REFRIGERATORS IS FLAT, ESPECIALLY FOR LOCAL PLAYERS Source: InterviewManufacturersFirst t

27、ier distributorsRetailersLocal manufacturers = 70-80%MNC manufacturers = 30-50%Department storesHypermarketsSpecialty storesOthersLocal manufacturers = 20-30%MNC manufacturers = 50-70%15aaaaaa010807BJ-refrigeratorAMONG ALL RETAIL CHANNELS, HYPER MARKETS AND SPECIALTY STORES ARE EXPECTED TO GROW FAST

28、 IN THE NEAR FUTURESales distribution by channel - white goodsPercent604030303840510121218Hyper marketsSpecialty stores*Department storesOthers5199820002003E* Includes electronic chains such as Guomei and DazhongSource: Saaaaaa16aaaaaa010807BJ-refrigeratorDISTRIBUTION STRUCTURE FOR SIDE-BY-SIDE REFR

29、IGERATORS DIFFER BY TIER CITIESTier 1 citiesManufacturers1st tier distributorsRetailers 2nd tier distributors20%70%End users10%Manufacturers1st tier distributorsRetailers 100%Tier 2 citiesSource: Field interview17aaaaaa010807BJ-refrigeratorKELONs CHANNEL STRUCTURE FOR REFRIGERATORS Source: Annual re

30、port, field interviews Rongsheng Kelon is currently exploring other channel strategies:Set up sales and distribution companies with distributors Cooperate with large retailers such as Carrefour and Guomei in product planning Kelon Retailers 1st tier distributors 95%5%Kelon Retailers 1st tier distrib

31、utors 40%60%Kelon 18aaaaaa010807BJ-refrigeratorHAIER HAS A DISTINCTIVE DISTRIBUTION APPROACH WHICH IS HEAVILY FOCUSING ON DIRECT RETAIL SALES FOR BASE AND HUB CITIES. Source: Field interview; McKinsey analysisSpecialty shoresFirst tier cityaaaaaaond tier cityThird tier cityHaier shop-in-shopsRetaile

32、rs in first tier cities Retailers in some large aaaaaaond tier cities Specialty store Haier shop in shops Retailers in aaaaaaond tier cities Specialty store Haier shop in shops Retailers in third tier cities Specialty storesHaier A/C sales Co.Haier sales branches in small aaaaaaond tier citiesWholes

33、ales in some third tier citiesHaier sales center in first tier citiesHaier sales center in some large aaaaaaond tier citiesHaier sales centers in first and aaaaaaond tier citiesHaier sales branches in big third tier citiesEast regionNorth regionWest regionSouth region19aaaaaa010807BJ-refrigeratorMAR

34、KET DEFINITIONSupply (competitor) analysisDemand (customer)analysisOverall environment analysisMarket definitionMarket assessmentMarket share by competitorIndustry profitability or economics20aaaaaa010807BJ-refrigeratorWHILE THE MARKET IS GETTING MORE DOMINATED BY TOP PLAYERS COMBINED, MNC PLAYERS A

35、RE GRADUALLY TAKING MORE SHARES* Rongsheng and Kelon combined Source: SINO-MR, GfK, LIIC100%=1998Others 1999200037.415.58.72.732.435.713.88.25.95.728.030.912.38.610.08.826.1aaaaaa Electrolux Meiling Kelon*Haier Siemens 8.69.19.4Haier and Kelon are the leading players. However, their market shares ar

36、e decreasing Although latecomers to the market, Electrolux and Siemens are quickly building up their positions by focusing on mid-to high-end and high-end markets Compared to other MNC players, aaaaaas growth in the market is rather slow Millions units, percent Refrigerator market share of major pla

37、yers in major cities4.5-6.215.6270.7101.23.9-6.9-5.0CAGR(98-00)PercentaaaaaaHaier/Kelon/Meiling Siemens/Electrolux2.63.32.70.721aaaaaa010807BJ-refrigeratorEAST, SOUTH AND SOUTHWEST CHINA SEEM TO BE THE WINNING TERRITORY FOR MNC PLAYERS * Kelon and Rongsheng combined Source: SINO-MR, GfK, LIIC100%=No

38、rth China Others aaaaaa Electrolux Meiling Kelon*Haier Siemens 2.33.50.5Electrolux and Siemens are doing particularly well in Southwest Apart from Southwest, MNC players are doing better in east China and South China, relatively more affluent areas aaaaaa is relatively strong in East China and South

39、 China North East East China Central South South West North West 0.90.71.432.011.68.59.85.31.730.836.616.111.57.65.90.421.926.06.29.79.48.210.130.331.014.36.99.710.53.324.420.411.09.819.218.50.320.833.818.29.68.60.124.15.6Market share in major cities by geography, 2000Million units, percentaaaaaaHai

40、er/Kelon/Meiling Siemens/Electrolux22aaaaaa010807BJ-refrigeratorLOCAL LEADING PLAYERS ARE DOMINATING IN ALMOST ALL PRICE SEGMENTS, MNC PLAYERS TEND TO BE STRONG IN MID-TO-HIGH END MARKETS * Another Kelons brand Source: SINO-MR, GfK, LIIC100%= 4,0002.01.92.024.112.51.217.819.624.80016.012.60.17.74.14

41、5.713.828.316.50.18.510.031.51.93.447.39.71.15.98.87.21.318.736.32.03.82.919.326.09.40.429.80.14.34.70.348.10.312.5Rongsheng*0Market share in major cities by price band, 2000Million units, percentElectroluxKelon/RongshengSiemensaaaaaa23aaaaaa010807BJ-refrigeratorLOCAL PLAYERS ARE DOMINANT IN MOST PR

42、ODUCT SEGMENTS, MNC PLAYERS HAVE STRENGTH IN MID-TO-LARGE CAPACITY MARKETS* Another Kelons brand Source: SINO-MR, GfK, LIIC100%= 100LOthers aaaaaa Electrolux Meiling Kelon*Haier Siemens 0.21.00.7Haier is leading in most markets Electrolux and Siemens have strong position in mid-to-large capacity mar

43、kets aaaaaa is very strong in small capacity ( 300L2.60.03Rongsheng* 40.47.8036.90.119.851.213.401.49.602.821.424.823.30.59.07.76.51.127.129.89.10.813.75.27.54.229.735.511.70.85.911.010.12.922.123.45.41.17.824.12.61.234.417.28.55.25.013.730.419.90.125.1019.02.61.152.00.20Market share in major cities

44、 by product type, 2000aaaaaaHaier/Rongsheng/Kelon Siemens/Electrolux24aaaaaa010807BJ-refrigeratorGE IS THE LEADING PLAYER IN SIDE-BY-SIDE REFRIGERATOR MARKET 83.374.016.720.0100%=Others* aaaaaa 1,0003,500The market is dominated by MNC playersaaaaaa has significant share in the market. However, GE cl

45、early dominatesNew players such as Haier are entering the market The high-end side-by-side refrigerator market is likely to remain MNCs territory while “local players” will focus on lower-end segmentsUnits, Percent Unit market share60* Includes Haier, LG, Whirlpool, etc.Source: Zhongxi Trading Co.,

46、aaaaaaGE19992000Growthpercent250N/A31921125aaaaaa010807BJ-refrigeratorKEY MNC PLAYERS ENJOY PRICE PREMIUMS IN SIDE-BY-SIDE REFRIGERATORSGE entered the market first and has the strongest brand image. Its price is the highest aaaaaas price is 10-20% lower than GEsOther players prices are on average 10

47、% lower than aaaaaas Source: Field interview; GfK26aaaaaa010807BJ-refrigeratorKELON AND MEILINGS FINANCIALS SHOW THAT MANUFACTURERS PROFIT SUFFERED OVER THE PAST FEW YEARS AND ARE EXPECTED TO REMAIN LOW Source: Morgan Stanley Dean Witter report, annual reportsMeiling19972001E2000E1999199819181245Kelon107500.4EBIT marginPercent27aaaaaa010807BJ-refrigeratorMARKET ASSESSMENTMarket assessmentSupply (competitor) analysisDemand (customer)analysisOverall environment analysisMar