In the course of the development of China's domestic air-conditioning industry for more than two decades, it has encountered several crises, solved the problems of incomplete supporting facilities, limited technology, insufficient supply of capacity, weathered the cold winter of the global financial crisis, and survived the fierce price war. The difficulty of killing has withstood the pressure of transformation of abnormally high inventory and channel changes, but now it has fallen into the predicament that the production and sales of new national coronaviruses have almost stagnated nationwide.
A Series of Effects Caused by the Delay in Resumption of Work
The first test is the challenge of insufficient mass production and shortage of supporting products. In order to prevent the epidemic from spreading, upstream and downstream industry chain companies in the air-conditioning industry cannot resume work on time. According to preliminary industry online investigations, the current machine factory is basically resuming work after February 10th, and the resumption time in Wuhan will be delayed. The resumption of upstream supporting supply chain companies is similar. Gree, Midea, Haier, TCL's production bases in Wuhan, and Wuhan Huake Optoelectronics and other supporting companies' production downtime are mostly 17 days or more.
The second challenge that needs to be addressed is rising costs. Increased labor costs. Just recently, the price of hired workers in factories along the coast has been quietly rising. Because of concerns about the sharp decline in returning workers, the manpower department of each factory has begun a fight for salvation, and wage promises have risen by 10% to 20%. This means that the increase in labor costs will eventually be transferred to commodity prices. According to the situation learned from the air-conditioning enterprise ports, the salaries of workers in some areas even reached 8,000 to 10,000. Increased logistics costs, whether it is the supply of supporting materials or the delivery of complete equipment, many need to bypass Wuhan, Jiangsu, Zhejiang and other regions, hundreds of kilometers more, the cost increase is an obvious reality. There is a possibility that component prices will rise. Insufficient parts supply and changes in supply-demand relations may lead to price increases.
The third challenge is the export market. Beginning in the second half of last year, due to weak domestic demand, companies have focused their business on the export market, but the current situation has had a very large impact on exports. From the perspective of the export scale of China's air conditioners for five consecutive years, the exports in February and March were more than 10 million units, which can basically account for more than 20% of the total export volume of the year.
The current time point is the peak season for the production and delivery of export orders, but the factory is unable to effectively carry out production, and some orders originally scheduled for delivery in February and March were affected. Other important industry exhibitions, including overseas exhibitions, are mostly in the first half of the year. Due to the delay or inability to participate in the exhibition, the number of export orders will be affected to a certain extent.
Fortunately, the China Import and Export Corporation for Mechanical and Electrical Products is also issuing timely force-of-force factual evidence for enterprises to minimize the impact.
What about Air-conditioning Companies at the Bottom of the Canyon?
In the face of problems and challenges, what is more critical now is what can we do in times of crisis, what opportunities can we seize to minimize the impact and suppression of this epidemic?
First, upstream and downstream manufacturers should regain confidence, work together to overcome difficulties.
The epidemic caught the entire industrial chain off guard, and production rhythms and business strategies were severely disrupted. In the face of common suffering, it is even more necessary for upstream and downstream manufacturers to work together and work together. At present, all upstream and downstream manufacturers are actively preparing for resumption of work, and masks and other resources are being actively deployed to adjust plans and goals together to ensure normal production.
Second, adjust the product structure along with the trend, and research and develop functional products that are substantially effective.
The epidemic struck, and emerging brands focused on health benefited a lot during this period. Let's see that the consumer end of the Chinese market has changed a lot now. At the same time, we can also see that invisible viruses are more threatening than visible bombs. Therefore, products with sterilization, disinfection, cleaning, and purification functions will be used in the future. There will still be great market opportunities.
For air-conditioning companies, whether the main functions such as health and purification can really play a substantial role, how can they adjust the product structure or function in accordance with market changes and consumer preferences, and grasp the market opportunities is the current priority.
Third, the entire machine company needs to lock up some supporting resources in advance.
At present, such long downtime and the uncertainty of resumption of work actually have a greater impact on upstream supporting companies.
In terms of parts and components, since the rotor compressor was prepared by the company years ago, the overall supply can still be balanced. In terms of chips and control devices, because the core IPM raw material wafer production capacity of the inverter air conditioner is relatively large abroad, the epidemic situation caused in the short term. The impact should be small.
However, attention needs to be paid to the bulk materials. Since the supply of high-standard silicon steel and other materials began to be tight a year ago, it can be expected that this situation will be further exacerbated by the impact of the epidemic and the uncertainty of upstream companies' resumption of work.
The other is copper. On December 26, 2019, the CSPT negotiation team including Jiangxi Copper and Tongling Nonferrous Metals, a total of 10 companies reached a production reduction agreement at the copper smelting company Fuzhou meeting. The rebound in copper prices provided good support. Locking resources in advance is the primary factor in ensuring smooth production after the epidemic is over.
Last but not least, the epidemic situation has hindered offline sales, but the importance of online channels has become more prominent.
Under the pressure of such an environment, it is also forcing traditional home appliance distributors and channel dealers to accelerate the transformation of new retail and find more sales channels. It is reported that during the epidemic period, some dealers used live video, online interaction, and other methods to store water and even convert it for sales, and to prepare for market sales after the epidemic in advance. The proportion of online retail will increase in the future.
The Future is always better than the Present
For air-conditioning companies that are now under more pressure, will they continue to expand their business once the epidemic is over? The answer is yes.
Finance writer Wu Xiaobo said that in the face of sudden crises, people tend to overestimate the immediate difficulties and underestimate the long-term opportunities and opportunities for change. Industry Online also made a preliminary judgment on the development of China's air-conditioning in 2020, and explained the future development of the industry from an objective perspective.
First of all, the development trend of the entire industry will show a relatively low-to-high development pattern, but the scale of the shipping end still has insufficient depth of callback. Therefore, the industry side of the shipping end of fiscal year 2020 still holds a relatively conservative judgment. Overall Shipments fell slightly. However, in the long term, there is still room for the development of China's air-conditioning industry, and steady growth is the main tone.
Secondly, the ongoing price war before the holiday will gradually slow down in the face of various cost increases. However, it is not excluded that some companies expect to adopt energy efficiency upgrades but not increase the price of products during the implementation of the new standard. Maintaining share and competitiveness requires good supporting resources and precise cost control. Although the channel and factory reserve inventory is high, it also guarantees that the channel will be available for sale as soon as the epidemic is over. How to clear and realize the high inventory of some enterprises is still an important task at present.
Third, the brand concentration of the home air-conditioning industry will continue to increase, leading companies have raised the threshold with price wars, and the new air-conditioning standard has once again raised the competition threshold. Enterprises that can quickly step on the nodes, smoothly transition, and seize opportunities will have stronger anti-risk capabilities in this test, thereby improving competitiveness and better adapting to future market competition.