Why is it difficult for the home appliance industry to have a second Haier, Midea or Gree

I don’t know if people in the home appliance industry have noticed that in the past 20 years of China’s home appliance manufacturing industry, especially in the six or seven years when the Internet wave was the most intense, there has not been a new rival that can compete head-on with Haiermei’s Gree.

Although in recent years, there have been constant arguments such as "new turning point", "things have changed", and "overtaking on the curve" in the Chinese home appliance market, it is clear that these are just theoretical wars of words and have not been implemented in actual market operations.

Home appliance giants are no longer young!

In fact, in the past 10 years or even longer, no new home appliance brands have been born in China's home appliance manufacturing industry, let alone new leading companies.

Today, most of the companies that dominate China's home appliance industry, whether it is Haier, Midea, Gree, TCL, Changhong, or Hisense, are no longer young and have at least 30 years of development history in the Chinese home appliance industry.

China's home appliance giants are all "middle-aged" and no longer young. In the past 10 years or so, there has been no shortage of new industry entrants to challenge the leadership of the above-mentioned old home appliance giants, but the actual result is: the industry has frequently seen turning points, and the status of the giants is difficult to shake.

What an interesting phenomenon. For the Chinese home appliance industry, which is not even half a century old, the leading enterprises have entered middle age early. As a result, the transformation and reform process of the home appliance industry will be delayed.

Home appliance channels have undergone a major change in ten years!

The retail channel, which many people in the home appliance industry do not care about, has undergone three major changes and iterations in just over 30 years, from the previous large agents and large chains to large e-commerce, and each change cycle does not exceed ten years.

From the initial flourishing of national agents, provincial agents to city agents, the distribution channel layout was carried out layer by layer, and then the national chain stores such as Gome and Suning, as well as the rapid rise of local chain stores and stores such as Jiangsu Five Star and Wuhan Industry and Trade, attempted to promote the flattening of urban channels. Today, the rise of national e-commerce giants such as Alibaba Tmall and JD.com is promoting the overall flattening and verticalization of channels in the context of urban-rural dualism.

Time and again, the leading players in the development of home appliance retail channels have been changing at an increasingly faster pace in the market. From Gome and Suning, which have been the leading players in home appliance retail for only five or six years, they were soon challenged by e-commerce companies such as Alibaba Tmall and JD.com.

Although the competition between Alibaba and JD.com and Suning and Gome in the home appliance retail market is still fierce, the outcome will soon be revealed, and the dominance of e-commerce is an inevitable trend. Next, JD.com and Alibaba will face the emergence of new challengers in the home appliance retail field.

The future challenger of e-commerce has already emerged. It is the new model of "integration of production and consumption" that Haier CEO Zhang Ruimin has been emphasizing in the past two years. That is to eliminate middlemen, and consumers are also manufacturers, and begin to directly take the initiative in the research and development, production and manufacturing of enterprises.

Why are the new giants in home appliances so hard to find?

Why has there been no new big brand in the field of home appliance manufacturing for more than a decade or even longer, while in the field of home appliance retail, new giant challengers emerge in just a few years? Why are the two fields, both upstream and downstream of the home appliance industry, so close yet so different?

The most direct reason is the different capital forces behind home appliance manufacturers and home appliance retailers. Behind JD.com and Alibaba are a large number of VCs from the Internet industry. They see the future business opportunities and imagination in the home appliance retail industry, which allows these e-commerce companies to "grab the market, grab the territory, and grab the cake at a loss" after entering the home appliance retail field for many years.

The reasons why capital is interested in the home appliance retail system rather than the home appliance manufacturing system are: first, the chain of the home appliance retail industry is relatively short and shows a trend of efficient standardization, connecting manufacturers at the top and users at the bottom; second, it directly interacts with families and users, and can quickly break boundaries and enter families;

Third, the retail platform has an obvious scale effect, and the high selling price of each home appliance can easily generate large-scale revenue; fourth, the market retail share tends to be concentrated. After the channel reshuffle and concentration of Gome and Suning, e-commerce has once again accelerated channel concentration and mastered the ability to negotiate with upstream manufacturers and even reverse customization and pricing.

Correspondingly, the key reasons why the home appliance manufacturing industry has not been disrupted by new cross-border forces driven by venture capital for a long time are: first, the industrial chain is too long. It is not just simple manufacturing and sales, but also involves upstream procurement, technological innovation, and downstream distribution, services, user communication, etc.; second, the input-output cycle in this field is too long. From project planning to capital investment, it often takes three to five years to really make money and find a sustainable development model. A large number of investment opportunities are eventually eliminated by time;

Third, the competition landscape of home appliance brands has become relatively mature. Whether in Europe, the United States, Japan, South Korea, or Southeast Asia, the number of home appliance brands that consumers truly recognize is relatively limited, often just three or five, and there are too few opportunities for new brands.

At present, traditional manufacturing industries such as home appliances are facing a series of changes, from the creation of a globalized system of technological innovation at the upstream, the intelligent upgrading of manufacturing, the e-commerce transformation of distribution, and zero-distance interaction at the user interaction level. From this perspective, once capital is invested, it is necessary to prepare for a protracted war, which is obviously not in line with the rules of venture capital.

Therefore, the future transformation of the home appliance manufacturing industry depends on itself!

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.