TCL acquires OMA Electric, the largest refrigerator exporter in China, and the white goods market will usher in a new round of reshuffle

The structure of China's white goods market is about to undergo new changes.

Since January this year, TCL has accelerated its layout in the refrigerator field and set its sights on the famous refrigerator manufacturer OMA Electric Appliances. It has acquired its shares many times through judicial auctions, competitive bidding transactions, etc. After a series of fierce offensives, on May 11, TCL officially became the controlling shareholder of OMA Electric Appliances.

For TCL, it believes that this acquisition will help them strengthen their influence in the refrigerator and even the entire "white appliance" field, and obtain capital to compete with companies such as Haier, Gree, and Midea; and for OMA Electric, joining TCL also gives this declining company a chance to turn around.

TV giants make up for the shortcomings of white goods

When it comes to TCL, most people's first reaction is definitely TV. In 2020, TCL's TV sales continued to rise both at home and abroad, with a global market share of 11.3%, ranking third in the world, and a domestic market share of 12%, ranking fourth.

However, in contrast to its strength in the TV industry, TCL has been in a tepid state in the field of "white home stores". According to data from the Forward-looking Industry Research Institute, in 2020, the market share of TCL's three major products, air conditioners, refrigerators, and washing machines, was less than 10%. Among them, the market share of refrigerators was only 3.34%, far behind leading companies such as Haier and Midea.

If you want to break through in the white goods field, refrigerators are a very suitable starting point. Aowei Cloud Network predicts that in the medium and long term, the refrigerator market will still be the category with the most stable growth. In 2021, the retail volume of the domestic refrigerator market is expected to increase by 2.0%, and the retail sales are expected to increase by 2.3%.

The reason why TCL chose OMA is of course its production capacity. As the world's largest refrigerator ODM manufacturer, OMA has 7 refrigerator manufacturing plants, 1 accessories plant and a parts plant, with an annual production capacity of more than 10 million units. The nature of OMA's ODM determines that part of such a huge production capacity will most likely go directly into TCL's refrigerator product line.

The so-called ODM, in layman's terms, is "OEM", where the factory designs and develops the products themselves and then sells them to other brands. In other words, TCL can expand its refrigerator product line without spending more research and development efforts. From this perspective, this is undoubtedly a good deal.

In addition, under the influence of the epidemic, refrigerators used to store food are in extremely high demand worldwide, especially overseas. Since the epidemic is not as well controlled as in China, many factories have not yet resumed work or cannot restore their pre-epidemic production efficiency, which has increased the global market's dependence on China's production capacity. According to customs statistics, refrigerator exports in 2020 increased by 35.6% year-on-year.

From 2009 to 2019, OMA has been the champion of China's refrigerator exports for 11 consecutive years, and has been the number one refrigerator exporter in Europe for 12 consecutive years. Therefore, this acquisition can also greatly boost TCL's overseas refrigerator business, which can be said to kill two birds with one stone.

Omar is deeply trapped in the P2P quagmire

Perhaps many people wonder why OMA Electric Appliances, which has high production capacity and stable overseas markets, has fallen to the point of being dependent on others?

This starts with the relationship between "Ouma Electric Appliances" and "Ouma Refrigerator".

In 2002, Zhongshan Ouma Electric Appliance Co., Ltd. (Zhongshan Ouma) was founded, mainly engaged in refrigerator manufacturing and sales. In 2008, Zhongshan Ouma completed the shareholding system transformation and changed its name to Guangdong Ouma Electric Appliance Co., Ltd., which is now Ouma Electric. From then until 2015, Ouma Electric's core business was refrigerators. In other words, before 2015, "Ouma refrigerator" was "Ouma Electric".

But in 2015, there were personnel changes in OMA Electric Appliances. Founder Cai Shier and 14 other senior executives resigned, Zhao Guodong became the chairman, and OMA Electric Appliances acquired Beijing Zhongrongjin Technology Co., Ltd. (Zhongrongjin), entering the field of Internet finance.

In this regard, an industry insider once said: "Oma Electric's management was very pragmatic. When they saw the rapid development of Xiaomi and LeTV, they gradually came to the idea that doing business was too hard and wanted to catch the express train of the Internet. However, Oma is the company with the least Internet genes among all Chinese home appliance companies. How can it catch the express train of the Internet? When Zhao Guodong, who was engaged in Internet finance, wanted to find a company engaged in business listing as a platform, the two hit it off."

After entering the financial field, OMA Electric Appliances established a wholly-owned subsidiary, OMA Refrigerator, which is independently managed and operated by a startup team headed by Cai Shier.

Oma Electric's idea of ​​developing both Internet finance and electrical appliances is a good one, but it has not been running smoothly in practice.

Since 2018, P2P explosions have occurred frequently, and relevant departments have tightened their supervision of Internet finance. Zhongrongjin, a subsidiary of Ouma Electric, began to have large-scale bad debts, which also seriously dragged down Ouma Refrigerator. In order to repay the debt, Ouma Electric had to sell its industrial equity. In February 2020, Ouma Electric transferred 49% of the equity of Ouma Refrigerator to the Ouma Refrigerator management team represented by Cai Shier and a special investment fund under the Zhongshan State-owned Assets Supervision and Administration Commission.

But this still failed to save OMA Electric. In 2020, OMA Electric achieved operating income of 8.345 billion yuan, an increase of 12.89% over the same period last year; attributable net profit was -540 million yuan, a decrease of 1112.86% over the same period last year; non-net profit was -510 million yuan, a decrease of 3037.03% over the same period last year. Among them, OMA Refrigerator's annual revenue was 8.3 billion yuan, a year-on-year increase of 16.1%. In other words, the financial business has completely become a burden for OMA Electric.

It can be said that OMA Electric Appliances has fallen into such a state entirely due to the drag of Internet finance.

Is a new round of reshuffle in the white goods market coming?

After the acquisition, OMA will refocus on the development of its refrigerator business and divest the assets of its financial technology business as soon as possible. TCL said it recognized OMA's business performance and would allow it to continue to operate independently and provide necessary financial support. This is a blessing in disguise for OMA, which has taken many detours but still has a solid foundation.

For TCL, how to quickly turn OMA Electric Appliances from loss to profit will be a big challenge. However, a series of resolute actions since this year also prove TCL's determination to quickly improve its competitiveness in the refrigerator field. It can also be speculated that TCL will also seek acquisitions in the white goods field such as air conditioners and washing machines to further expand its home appliance business.

Regarding this acquisition, experts said: "In the field of home appliances, brand competition has been extremely fierce in recent years, and the technology research and development and industry development are relatively mature. Except for the companies that have become giants and integrated group companies, non-head brands that only rely on relatively single industry support will find it extremely difficult to develop, and it is only a matter of time before they are integrated."

Coincidentally, Galanz, a major microwave oven manufacturer, also recently acquired a 51.1% controlling stake in Whirlpool (China). Similar to OMA Electric, Whirlpool also has a large number of high-quality assets in the field of white goods, but it is also facing a considerable dilemma: Whirlpool (China) has been losing money for two consecutive years. In 2019-2020 and the first quarter of 2021, Whirlpool (China)'s net profit was -323 million yuan, -150 million yuan, and -25 million yuan, respectively, with year-on-year changes of -223.28%, 53.56%, and 76.63%. Revenues were 5.282 billion yuan, 4.944 billion yuan, and 1.411 billion yuan, respectively, with year-on-year changes of -15.97%, -6.39%, and 59.98%.

Advantageous companies in a single home appliance field have formed alliances and bought up other companies' high-quality white appliance assets, which means they will challenge traditional giants such as Haier and Gree. The landscape of China's home appliance field may be about to change.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.