The recent performance of Whirlpool in the Chinese market has been really commendable. Generally, this is apparent in two ways: the first is that brand recognition and awareness of Whirlpool have significantly increased; the second is that the performance of Whirlpool products in the market is better than expected.
Even some competitors have been willing to acknowledge Whirlpool’s market turnaround over the last two years, which has been truly aggressive.
Whirlpool has established a new competitive arena in a weak market
In the current market environment, it was not at all easy for Whirlpool China to achieve this level of performance. First of all, the real estate industry is the main driver for home appliance sales. The government has required that this market should focus on stability, and a series of rigorous adjustment and control measures have also served to cool things down.
Data from the National Bureau of Statistics shows that by March 2019, the cumulative footage of commercial housing sold shrank by 0.9%; in particular, the cumulative footage of the complete commercial housing sold declined by 18.1%, and the cumulative footage of the forward delivery commercial housing was increased by 3.2%.
The cooling down of the real estate industry has also affected some related industries. Growth is also slowing down in home furnishings, building materials, and home appliances. Wu Xianjian, Secretary-General of the China Consumer Electronics Channel Alliance (CCCA) under the China Household Electrical Appliances Association (CHEAA), says: “The ending of the ‘golden decade’ of the real estate industry has also directly affected the closely-related home appliance industry.”
The Report of China’s Home Appliance Industry for Q1 2019 released by the National Appliance Industry Information Center (NAIC) shows that, in the first quarter of 2019, the size of China’s home appliance market reached RMB 183.4 billion, declining 3.1% year-on-year. For traditional home appliances, market growth is gradually stopping, and a cold winter for this sector appears to be in prospect.
Data from the AVC website shows that in the first half of this year, the total retail sales in China’s home appliance market (including 25 categories of appliances monitored in the black & white appliance market) were RMB 396.8 billion, declining 3.2% from the same period of last year. By category, the black appliance market with a high installed base plunged 11.9%, the white appliance market also declined significantly, and kitchen & bathroom supplies and emerging categories failed to meet expectations.
Yet, while the immediate prospects are gloomy, the market also has many opportunities. Given the mega-trend of consumption moving upmarket, consumers are increasingly turning towards intelligent, healthy and multifunctional products offering better user experiences, and products including 8K TVs, healthy air conditioners and automatic dishwashers have become favourite items.
As long as home appliance manufacturers can meet their customer’s need for upgraded products, they still can achieve growth during a time dominated by excess production capacity.
Washing machines are Whirlpool’s main business. Taking it as an example, the latest data of CMM shows that in June 2019, the offline market for washing machines increased in dollar value but declined in units sold compared to the same period of last year, and a trend towards the higher end was obvious. But Whirlpool moved against the market with sales growing 53.6% in RMB value and 53.7% in units sold.
What is the secret of Whirlpool’s success in China?
Based on its accurate understanding of consumer needs, Whirlpool has successfully managed to grow in a market with excess production capacity.
By carefully examining how Whirlpool has changed its approach in China, we can see that technology innovation, developing multiple categories, and working on experience stores were the efforts made by Whirlpool to pave the way for sound development.
At the end of June, Whirlpool China President Jason Ai said during a media interview that Whirlpool is laser-focused on creating products relevant to the local market. The company combines Whirlpool China’s advantage of having a national industrial design centre with Whirlpool’s strong technological know-how accumulated over the past 100+ years to present as many innovative products as possible to consumers—all designed to get back to the basics.
Whirlpool is stepping up its efforts in the China market in 2019. In addition to its rich lineup of products, the company is also trying to increase customer loyalty through offline scenario-based experience stores. This is also one of the key tasks for Whirlpool China this year.
“Whirlpool’s experience stores for kitchen supplies will quickly cover the key tier 1-2 cities in the future,” said Ai in an interview by Lankeji.com. “The store located at Beijing’s Jimei Building Materials Market will open in August, and the opening of another store on Shanghai’s Yishan Road is also being prepared. By the end of next year, Whirlpool is expected to have major experience stores in 15 Chinese cities.”
“From consumers to consumers”, Whirlpool is discovering needs when interacting with consumers, collecting information about the pain-points of customers, and then providing feedback to its factories, to reverse-customize products through a consumer-centric approach. By addressing what is really needed by consumers, it is able to cultivate their willingness to buy in advance.
“Many of our products are now a result of collecting customers’ pain-points,” said Ai. “With the Whirlpool EMPEROR front load machine, for example, the timed washing is not like that of conventional washers where washing begins after a set number of hours. Our washers have a built-in real-time clock. If you expect to get home at 7 pm this evening, you can set the washing time for 7 pm. This does not mean that the washing will begin at 7 pm, but that the washing will be finished at 7 pm. This is the timed washing concept of the EMPEROR front load machine. All the design elements of these products are from our understanding of customers and their feedbacks. The details come from the real needs of customers.”
It’s worth noting that a big part of Whirlpool’s overall brand philosophy comes from feedbacks in the results of a survey conducted in 2018 among over ten thousand Chinese consumers. The four directions for product development based on this are as follows:
The first is looking good. For the current generation of mainstream consumers–the post-80s and post-90s—the design of Whirlpool products must be beautiful, fashionable and hi-tech.
The second is of exceptional performance. The performance in real-time washing must be exceptional for hundreds of kinds of stains including soy sauce and wine.
The third is to ensure that the materials used to build Whirlpool products are healthy. Especially in recent years, consumer’s health awareness has been awakened. Therefore, Whirlpool has integrated the “health” element into product design. For example, all the materials for the contact surfaces of Whirlpool refrigerators are made of food contact materials (FCMs) imported from Germany, so you don’t have to worry about mould on plastic and glass surfaces. And the overall structural design of the refrigerators is very healthy too, focusing on the use of disinfecting technologies and preservation technologies.
The fourth is flexible use. All Whirlpool products including kitchen appliances like ovens, refrigerators, and washers are designed for flexible use. Built with 6th sense intelligent technologies, they enable customers to experience simple and convenient operation by pressing just one single button.
Carefully designed details for Chinese consumers
Whirlpool has taken the needs of consumers very seriously. The company is adept at paying attention to all the details. Take the imported Whirlpool dishwasher for example. The height of the kitchen counter is 90 cm in Europe but 80-85 cm in China and this 5-10 cm change in space by Whirlpool ensures that the dishwasher can hold 14 sets of Chinese tableware, and has substantially increased its internal capacity.
Another example is Whirlpool’s garbage disposers. Currently waste classification has become a hot topic for Chinese consumers, and garbage disposers—one of Whirlpool’s key product series—have also become hot products. Based on the eating habits of Chinese consumers, Whirlpool’s garbage disposers come with an antibacterial grinding bin. Made with composite resin, the grinding bin is equipped with an anti-oxidizing splash guard and a stainless-steel grinding component to form a complete antibacterial grinding system, which can effectively prevent bacterial growth, to enable Chinese families who are accustomed to using a lot of oil and salt during cooking to also keep the sink clean and fresh, and to keep their entire kitchen and their extended living environment clean.
Every carefully designed detail is a reflection of Whirlpool’s meticulous approach. It is because of this attitude that Whirlpool is becoming ever more popular with consumers in China.
The importance of the China market to Whirlpool speaks for itself. “Globally, Whirlpool China has two identities,” says Jason. “First, the China market itself is the world’s single largest market; second, Whirlpool China is also Whirlpool’s largest manufacturing and innovation base in the world. This is the definition of the China market by Whirlpool Corporation. We have two levels in business: one level is the domestic market, and another level is the export business. Currently, our export business is steadily growing, and the year-over-year growth rate last year reached 30%. Within Whirlpool Corporation, our products are recognized by the group and global consumers. Many of Whirlpool China’s refrigerators and washers are produced in China and exported to other parts of the world.”
Details determine success or failure. Whirlpool, a company whose brand DNA, dates back more than a century, is in a critical stage of building momentum here in the China market. Over the next two years, Whirlpool China will continue to focus on brand building and reinforcing. Its future is very promising.