In the first month of the cold year of 2025, Dong Mingzhu traveled non-stop to Shijiazhuang, Zhengzhou, Nanjing, and Hefei to attend the regional dealer meeting. In January Sicheng, 70-year-old Dong Mingzhu is still working hard in the market, and her behavior has even caused heated discussions in the circle. (Cold year: the jargon of the air-conditioning industry, generally refers to a frozen year from August of the previous year to July of the current year)
It is not only Dong Mingzhu who is "anxious", but also major brands are constantly moving. At the just-concluded TCL Air Conditioning Division 2025 Cold Year Global Supply Chain Ecology Conference, TCL executives and industry experts came together to cheer for supply chain partners......
Since the beginning of this year, affected by a variety of factors, the domestic market demand for air conditioners has been sluggish, price competition has intensified, and the industry has moved forward. In the past cold year of 2024 (August 1, 2023 to July 31, 2024), the performance of the domestic air conditioning market was not ideal. According to GfK's total data, the retail volume of the domestic household air conditioning market in the cold year of 2024 will only increase slightly by 0.5%, but the retail sales will decline by 3.2%.
It is worth mentioning that the export market and the domestic market show a significant contrast, China, as the world's largest producer and exporter of air conditioners, according to AVC data, in the cold year of 2024, the total domestic sales of household air conditioners in China will be 90.89 million units, a year-on-year decrease of 1.8%, and exports will be 81.63 million units, a year-on-year increase of 30.9%.
At present, the development of the air conditioning industry in mainland China has shifted from the scale dividend period to the product dividend period, and the importance of innovative supply and effective supply has become more prominent. August is the first month of the cold year of 2025, and the start situation is complicated, how should air conditioning companies open up a new situation?
The peak season is sluggish, and the inventory backlog is serious
In 2024, due to the dual impact of the macroeconomic environment and weather factors, the traditional sales season of the air conditioning industry will not arrive as scheduled. For example, the air-conditioning industry, which "relies on the sky to eat", has not encountered "good weather" today, especially in major market areas such as South China and East China, and the long-term continuous rain has led to significant weakness in the industry's retail demand. According to data from Aowei Cloud Network, in the first half of 2024, the omni-channel sales of the air conditioning market will reach 33.15 million units, a year-on-year decrease of 11.0%, and the sales volume will be 111.4 billion yuan, a year-on-year decrease of 14.5%.
Poor sales during the peak season further exacerbated the inventory backlog. Yang Chao, deputy general manager of the major appliances division of Aowei Cloud Network, pointed out that as of the end of June, the total inventory of the industry has climbed to about 50 million sets, a new high in the inventory level in the past two years.
What's more serious is that while the inventory is high, the price of the main raw materials of air conditioning has also shown a significant upward trend. In particular, the price of copper, which is a key raw material for air conditioning condensers and evaporators, has continued to soar this year, once approaching a high of 90,000 yuan/ton, which has brought a lot of cost pressure to air conditioning companies.
It is worth noting that despite the increase in the price of key raw materials, the sales of low-priced air conditioners have increased. According to the data of Aowei cloud network, in the first half of 2024, the omni-channel sales of the domestic air conditioning market will decline as a whole, but the proportion of low-cost models will increase. Among them, the sales volume of online 1.5 horsepower air conditioners below 2,000 yuan accounted for 22.8%, an increase of 6.1 percentage points year-on-year.
The market environment is like this, and August this year is the starting month of the cold year of 2025, which is not difficult to understand why Dong Mingzhu actively mobilized dealers at the beginning.
Seize the opportunity and keep up with market demand trends
Despite the many challenges, the leading companies have achieved good results. In the first half of the year, the profit margin of Haier's air conditioning division achieved a net increase of 1.4 percentage points, and the market share of its high-end brand Casarte in the price segment of more than 15,000 yuan also increased. At the same time, Midea's HVAC business achieved revenue of 101.461 billion yuan, a year-on-year increase of 10.28%, and a gross profit margin of 26.35%, an increase of 2.98 percentage points year-on-year. Gree also performed eye-catchingly, with revenue of 100.287 billion yuan in the first half of the year, a year-on-year increase of 0.5%, and net profit attributable to shareholders of listed companies of 14.136 billion yuan, a year-on-year increase of 11.54%. Among them, the revenue of the air conditioning business, which is Gree's flagship product, increased by 11.38% year-on-year.
Huang Zeping, director of global user research and planning of Haier air conditioner, believes that the short-term market downturn cannot change the general trend of industry upgrading. At present, global climate change and diversification of living forms have prompted consumers to pursue the perfect integration of energy saving, health, comfort and smart life. Haier air conditioners keep up with the changing trend of user needs and promote the transformation of air conditioners from a single product to a whole-house smart and healthy air solution.
Another giant, Midea, its HVAC business has not stopped in the field of traditional household air conditioning, but actively made efforts to the household central air conditioning track; At the same time, Midea takes "full space, full intelligence, good air, and customization" as the starting point to create a more integrated and comprehensive whole-house smart air solution.
Other industry insiders pointed out that the air conditioning market is still in the adjustment stage, and not all companies can stabilize their head position in the polarization of the market like industry leaders such as Gree, Haier and Midea. FOR EXAMPLE, IN JULY THIS YEAR, SCHNEIDER, A EUROPEAN HOME APPLIANCE BRAND, DECLARED BANKRUPTCY PROTECTION BECAUSE IT COULD NO LONGER PAY FOR ITS GOODS.
The industry is facing both outstanding challenges and unprecedented opportunities. Recently, the central government has successively introduced an "upgraded" policy to promote the trade-in of automobiles and household appliances, and most provinces and regions have also launched detailed implementation rules for subsidies for household appliances. In this regard, home appliance companies have responded to the call of the policy, such as the Midea Group invested 8 billion yuan to support the trade-in activities, and Oaks put forward the "five free and three unlimited" trade-in service policy.
"With the gradual release of the 'trade-in' policy dividend, industry online survey data shows that enterprises generally reported that the terminal retail and installation card data in August rebounded, which played a positive role in the destocking, and the high inventory problem that plagued enterprises and dealers in the early stage has been alleviated.
Experts suggest that the trade-in of household appliances and the promotion of green household appliances consumption are the focus, which in turn forces enterprises to cultivate new industries, give birth to new models, and form new kinetic energy. The industry generally believes that the traditional business logic of "relying on the sky to eat" and "winning at low prices" is undergoing profound changes, and air conditioning companies must re-examine and reconstruct their competitive strategies and business models to adapt to the new market environment.
Seize overseas, enterprises accelerate the brand to go overseas
As the world's largest producer of air conditioners, mainland China accounts for half of the world's output. According to the National Bureau of Statistics, by the end of 2023, the number of air conditioners per 100 households in the country has reached 145.9.
In the face of the saturation of domestic market demand, the overseas market has become a hot spot for domestic air-conditioning companies.
At the just-concluded TCL Air Conditioning Division 2025 Cold Year Global Supply Chain Ecological Conference, Du Juan, CEO of TCL Industrial, said frankly that in recent years, TCL Industries has accelerated the pace of transforming from a "Chinese enterprise with overseas business" to a "global enterprise with Chinese characteristics". In the first half of this year, TCL air conditioning export orders increased by 28.6% year-on-year, and it is expected that the export volume will continue to rise as the high temperature continues.
The high growth of TCL air conditioning export orders is a microcosm of the mainland's air conditioning export boom. According to data from the General Administration of Customs, from January to July this year, the mainland's air conditioning exports reached 43.12 million units, a year-on-year increase of 24.1%. The reason behind this high growth is the strong global demand from hot weather on the one hand, and the weakness of overseas manufacturing on the other, which makes overseas markets more dependent on Chinese exports.
The annual reports of listed companies also fully confirm this trend. Midea Group's overseas revenue in the first half of the year increased by 13.1% year-on-year, and Gree's export revenue in the first half of the year increased by 15.6% year-on-year, of which the export of independent brands accounted for nearly 70% of sales...... Since the beginning of this year, Gree, Haier, Midea and others have firmly promoted the deep cultivation of global localization.
For example, Gree is trying to "make the world fall in love with Made in China". At present, Gree's products have been distributed in more than 190 countries and regions around the world, and its own brands account for nearly 70% of total export sales.
Another example is that Haier has always adhered to the strategy of brand going overseas. On August 14 this year, Haier held a groundbreaking ceremony for the Chonburi Air Conditioning Industrial Park in Thailand. The industrial park covers an area of about 324,000 square meters, with an overall planned annual production capacity of 6 million sets, mainly producing a full range of air conditioning products. As a large-scale R&D and manufacturing center for Haier air conditioners for the global market, the products of the industrial park will be exported to North America, Europe, Southeast Asia, South Korea and Japan to meet the needs of users in different regions.
Midea put forward a new development strategy of building a "second home" overseas. On the day of the Mid-Autumn Festival this year, Midea Group was listed on the main board of the Hong Kong Stock Exchange, becoming another "A+H" share listed company. This move is widely believed to be a way for Midea Group to use Hong Kong, a global financial center, to better expand its operations in overseas markets, including the layout of brands, products, financing and other aspects.
However, it is worth noting that the depreciation of the dollar due to the United States interest rate cut could exacerbate trade tensions. Overall, although August is the starting month of the cold year of 2025, there are some positive signals, but the development trend of the whole year still needs to be further observed.
(Popular News · Fengkou Financial Reporter Wang Beibei)