Chinese home appliances are transforming, while Japanese companies are changing their ways

In recent years, while Chinese home appliance companies have collectively transformed themselves to pursue high-end products, intelligent manufacturing, younger brands, and more fashionable marketing, Japanese home appliance companies have been changing their battlefields: returning from overseas production to domestic manufacturing. Why is this?

Recently, data from the Ministry of Economy, Trade and Industry of Japan showed that due to the continued depreciation of the yen and the rise in labor costs in China, the overseas production cost advantages of Japanese home appliance companies are weakening, and the domestic home appliance manufacturing industry has begun to recover. Some Japanese companies have begun to use domestic factories to improve the competitiveness of their products, while putting the brakes on the transfer of production overseas.

In other words, Japan's home appliance manufacturing industry has begun to return to its home country and switch to a new track. Since the beginning of this year, the amount of products purchased by Japanese home appliance companies from overseas factories has decreased by 13% compared with a year and a half ago, and the proportion of imported products in the Japanese domestic market has also declined. This is not because a large number of foreign companies have seized the market share of Japanese home appliances, but because of the comprehensive return and return of Japan's home appliance manufacturing industry. In particular, they have chosen to gradually reduce their investment in building factories in China.

Unconsciously, the large-scale, low-cost competitive advantages that China's home appliance manufacturing industry has been "proud of" for the past 30 years are rapidly disappearing. Next, facing global competitors, how can Chinese home appliance companies, without demographic dividends, policy dividends, and local differentiated competitiveness, continue to compete head-on with foreign giants?

According to a survey by the Japan External Trade Organization, the monthly salary of ordinary workers in China's large and medium-sized cities has increased by 20-30% in the past five years. If we add the cost of raw materials, exchange rate fluctuations, logistics costs and other production and manufacturing costs, the cost advantage of China's home appliance manufacturing industry is rapidly disappearing compared with developed countries such as Europe, the United States, Japan and South Korea. In fact, this has also brought considerable challenges to the overseas exports and trade of many Chinese companies: they must change from "Made in China exported to the world" to "Chinese home appliances made globally" in order to adapt to and hedge the impact of labor cost fluctuations in different countries and regions.

The full recovery of Japan's home appliance industry has also sounded a new alarm for the development of China's home appliance manufacturing industry. Why is this? Can the current transformation and upgrading of China's home appliance industry activate a new round of market demand and growth space? Finally, how can China's home appliances cope with the series of changes in the external competitive environment and factors caused by the repatriation of manufacturing factories of European, American, Japanese and Korean companies?

As low-cost manufacturing turns from an advantage to a disadvantage, for the Chinese home appliance industry and enterprises, this is definitely not a problem that can be solved by business transformation and product upgrades, such as the current shift from low-end to mid-to-high-end, and from manufacturing to creation. The only direction for breakthrough is to completely abandon the past path, establish a new development track, and build new differentiated competitiveness.

Although the current labor and other manufacturing costs continue to rise, resulting in a decline in China's home appliance manufacturing advantages, the supporting and supply advantages of China's home appliance industry chain upstream and downstream are still very obvious and prominent. How to use the current industrial chain advantages to complete the creation of a new path? This undoubtedly requires each home appliance manufacturer to explore and find their own way out.

At the same time, in recent years, facing a large number of European, American, Japanese and Korean home appliance peers, China's home appliance industry has another competitive advantage, that is, we are in a rising channel, taking a step-by-step offensive posture, and dare to make large investments and large resources in the fields of intelligent manufacturing and technological innovation in the home appliance industry. This is in sharp contrast to the defensive posture and conservative style of play of Europe, America, Japan and South Korea.

Next, facing this round of "return tide" of foreign-funded and foreign-branded home appliance manufacturing, the issues that Chinese home appliance companies are considering are no longer about making a few good products, promoting channel upgrades, or continuing to invest in technological innovation. Instead, they are rethinking how to reorganize resources such as manufacturing advantages, R&D advantages, and marketing and promotion advantages, and combine China's most active capital merger and acquisition forces to reorganize and recreate various production factors.

I believe that the turning point for the collective rebound of China's home appliance industry will be at the next matching point!

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.