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2022 is the peak, and 2023 is the bottom.
Behind the V-shaped trend of the Malaysian home appliance industry is the consumer environment that urgently needs guidance. Facing the uncertain external environment, how to find a certain direction is the fundamental and way out.
As we enter the countdown to 2023, the overall trend of Malaysia’s home appliance industry has basically set the tone: consumption downgrade, industry decline, and e-commerce impact have become the three major keywords.
If there is no significant change in the overall environment and lack of motivation to increase economic income, how should the home appliance industry go? GAN CHENG SWEE, former president of the Malaysian Home Appliances Merchants Association and president of the Johor Home Appliances Merchants Association, as an industry veteran, gave a detailed answer in an interview with “Frontier Technology”.
Consumption diversion, retaliatory tourism affects purchasing power of home appliances
Frontier Technology: We have learned from many home appliance channels that the sales volume of the home appliance industry in 2022 is relatively good in recent years. Why is it that after the epidemic ends this year, the sales volume of the home appliance industry is worse than last year? Is the weakening demand for home appliances caused by reduced income?
GAN CHENG SWEE: In terms of economic income, the income level this year is basically the same as last year. Under the same conditions, why has the sales volume of the home appliance industry declined significantly this year? Mainly consumption diversion.
For example, during the epidemic period, consumers were unable to travel and stayed at home. The demand for home appliances increased to meet the needs of a specific period or to improve the home environment. After liberalization in 2023, the tourism market experienced a retaliatory rise. Consumers who originally planned to buy home appliances postponed their purchases and spent their money on the tourism market. This means that even if economic income remains unchanged, consumption diversion will occur and affect the overall performance of the home appliance industry.
Overall, this year’s contraction in consumption also includes factors such as consumers’ lack of optimism about expected economic income.
Malaysia’s home appliance industry will drop 15% year-on-year in 2023
Frontier Technology: The decline of the home appliance industry this year is a foregone conclusion. Compared with last year, how big is the decline?
GAN CHENG SWEEi: According to our estimates, the Malaysian home appliance industry will decline by about 15% year-on-year this year, which will have a relatively large impact on the industry.
In addition to consumption diversion, consumption downgrade characteristics are more obvious this year. On the one hand, users are not optimistic about expected income. On the other hand, market competition is fierce and price-driven. Coupled with the squeeze from e-commerce, low prices have become the main theme of the home appliance industry this year.
Frontier Technology: Will e-commerce’s suppression of consumption downgrade become more obvious this year?
GAN CHENG SWEE: After the outbreak of the epidemic, due to the impact of control, consumers were unable to go to physical stores for shopping, so e-commerce developed rapidly. It should be said that in the past three years, some consumers have developed the habit of online shopping.
However, due to the fierce competition among e-commerce companies, there has been a lot of price competition among e-commerce companies this year, with all of them using low prices to acquire customers. In addition, Chinese e-commerce giants with equity participation have poured into the Malaysian market, and Lazada and Shoppe have attracted tens of thousands of Chinese e-commerce sellers. Malaysia has a population of more than 30 million and the market capacity is limited. The quick and effective means of competition is price. If consumption diversion is one of the factors, then low-price competition from e-commerce is another important factor that downgrades consumption and affects offline physical stores. 发送反馈 侧边栏 历史记录 已保存 提供建议
There is still room for kitchen appliances, and we must cultivate our internal skills in 2024
Frontier Technology: Will there be any changes in the external environment of home appliances in 2024? For channel dealers, how to respond to market changes?
GAN CHENG SWEE: We predict that there will be no significant difference between the trends in 2024 and this year, and home appliance channel vendors are still under pressure. However, that doesn’t mean there aren’t opportunities. For channel dealers, it is even more necessary to cultivate internal strength in 2024.
For example, big data can be fully utilized to sort out the customer value system and provide segmented home appliance products based on different groups of people. Channel dealers cannot regard price drive as the only means, but should consider providing more value-added services to consumers.
Frontier Technology: The industry is generally declining. Which subcategory do you think there will still be opportunities in 2024?
GAN CHENG SWEE: I think there will be room for growth in kitchen appliances. Although the home appliance industry as a whole is not optimistic, as consumers’ demands for healthy and quality life continue to increase, kitchen appliances can satisfy more people through product segmentation.
In particular, there are many young people in Malaysia, and they are more willing to accept new things. Nowadays, young people cook at home and use electronic products without fumes and pollution. This is a potential business opportunity. In terms of demographic structure, young people under the age of 25 in Malaysia account for 39.4% of the total population, which are potential users.
Chinese home appliances have advantages in the mid- to low-end segment, but overall they have the advantage of being a latecomer.
GAN CHENG SWEE: Judging from the performance of the Malaysian home appliance market in recent years, the influence of European and American home appliances is weak, Japanese home appliances are gradually declining, and Korean home appliances continue to develop but face a ceiling. On the contrary, Chinese home appliance companies have emerged as a new force and are growing the fastest.
Of course, from the perspective of user volume and base, Chinese companies are currently not comparable to South Korea and Japan. Korean home appliance brands entered Malaysia earlier than Chinese brands and attracted a large number of users through localization and differentiation strategies. Chinese home appliance companies are currently stuck in the mid- to low-end segment. However, we cannot ignore the growth rate of Chinese brands, their latecomer advantages and their confidence in building mid-to-high-end brands.
Frontier Technology: Do you think the late-mover advantage of Chinese home appliance brands lies in the categories of subdivisions or in the overall home appliance industry?
GAN CHENG SWEE: Although Chinese home appliances give people the impression that they are trading price for market, they have made great progress compared with the past. Be it quality, design or functionality, there are huge changes. It’s just that there is still a process needed to cultivate brand and user awareness.
The price advantage of Chinese products is actually also reflected in the advantage of the industrial chain, which many countries cannot match. In addition to the industrial chain advantages, there are also consumer environment advantages. Chinese consumers have a very mature consumption environment for home appliances. Both functions and designs are more in line with user needs. This is something that many countries cannot do, and this is also one of the competitive advantages of the product.
Therefore, we believe that Chinese brands will definitely have a late-mover advantage. At present, the influence of Chinese brands in the mid-to-high-end market is weak, but they will definitely occupy the high-end market in the future.
