Refrigerators & Freezers

China's household refrigerator industry has long been consolidating due to rising costs and intense competition from multi-national companies. However, despite such an industry shakeout, both production and exports continue to grow at a brisk pace.

This all-new 105-page report explains the steps China manufacturers are taking to stay competitive and flags new sourcing opportunities available to you.

With impartial profiles of major manufacturers, as well as a comprehensive industry overview, you'll be well positioned for future success in this changing supply environment.

What you'll get

In-depth profiles of 15 leading refrigerator and freezer makers, providing information on manufacturing capabilities, product offerings and future plans. Based on factory tours and personal interviews with senior managers, these profiles are not available anywhere else

Profile tables of an additional 44 suppliers with key information including machinery installed, tests conducted in-house, exports by product type and market, and much more

A Product Gallery featuring 141 best-selling refrigerators and freezers, including 75 portable models — with detailed product descriptions and full-color images

The results of Global Sources' latest supplier survey, forecasting price, product, production and R&D trends in the next 12 months

This report covers: household refrigerators, portable refrigerators and standalone freezers

How you'll benefit

Get reliable, easy-to-use Price Guides for the different types of refrigerator and freezer manufactured in China

Find out how rising costs of metal and plastic in China-made refrigerators impact your bottom line

Understand the critical differences between low-end, midrange and high-end models

Widen your competitive edge by reviewing the latest design trends in the fast-growing portable refrigerator line

Executive summary

China produced about 30 million household refrigerators in 2004, including 6 million portable refrigerators, accounting for an estimated 30 percent of global output. Twelve million units worth US$777 million were exported, mainly to the European Union, United States, Asia and the Middle East. Refrigerator and freezer exports together amounted to US$1 billion.

Despite the consolidation that the industry has been going through, exports have grown substantially in the past few years. Refrigerator exports grew 36.3 percent in 2003 and 40 percent in 2004, while the exports of freezers jumped from 18.2 percent in 2003 to 51.2 percent in 2004.

The robust export growth is mainly attributed to manufacturers being able to apply new technologies and offer these at lower prices. Intense competition from multinational companies in the domestic market is also driving makers to expand their export markets.

The following are some of the key trends we see in China's household refrigerator and freezer industry in the next 12 months:
• The industry is expected to consolidate further for a year or two, as local companies continue to merge with or acquire shares in smaller companies. The number of China suppliers will be down to about 15 to 20 from the current 50.

• The small core of companies left will have higher production capacities, giving them a sharper competitive edge in both the local and export markets.

• Exports of portable refrigerators will increase exponentially as manufacturers target the premiums and promotional markets in the United States and the European Union. These low-priced thermoelectric refrigerators come in novel shapes and bold colors and are expected to flood the market in the next 12 months.

• With the China government's policy on CFC-free production taking effect in 2005, most suppliers will only use ozone-friendly refrigerants such as R600a and R134a by the end of the year.

• Energy efficiency and cooling capacity will be the major R&D focus for most suppliers. Output and exports of high-end refrigerators with convenience features such as quick chilling, flash freezing, controlled-climate storage will also increase.

• The rising cost of raw materials, especially of cold-rolled steel sheets, and the shortage of compressors, will continue to have a significant effect on prices in 2005.

This report covers household refrigerators, portable refrigerators and standalone freezers. The Products & Prices section provides an overview of each of these categories in terms of features and price ranges.

The Manufacturing module discusses the main production steps and standard testing procedures and examines how they differ in small, midsize and large companies. More information on refrigerants, foaming materials and compressors is found in the Materials & Components section.

The refrigerator and freezer industry in China consists of about 100 exporters, most of which are locally-owned large and midsize manufacturers.

Industry overview

China's refrigerator industry has been going through a period of consolidation for a number of years. There are currently about 40 locally-owned household refrigerator and freezer makers in China (excluding companies that specialize in portable refrigerators) down from about 100 in the late 1990s.

In the midst of this shakeout, the relatively new portable refrigerator segment is rapidly expanding, with a large number of makers steadily venturing into this export-oriented line.

The household refrigerator and freezer industry is projected to consolidate for another one to two years at the most, after which about 15 to 20 major local players will rise. In the long term, however, only five to six very large makers are expected to dominate the industry. Despite the drop in the number of suppliers, output and exports will continue their upward trend.

The shakeout has been at two levels. In the 1980s and early 1990s, many MNCs were taking over, or forming joint ventures with, well-established local makers. Although, this trend continues to some extent, much of the recent consolidation is attributed to local companies merging with, or acquiring a stake in, their counterparts.

For example, just this year, GD Midea Refrigeration became the majority stakeholder in refrigerator maker Hefei Royalstar.

In November 2004, Midea also acquired 42.36 percent in shares of the 20-year-old refrigerator maker Hualing Group, becoming its largest shareholder. Similarly, in 2002, Greencool Enterprise Development Co. Ltd. became the single largest share holder of Guangdong Kelon.

A number of factors have been contributing to the consolidation. Intense competition from MNCs in the growing domestic market is one of the main reasons. Large local companies see acquiring other makers as a way to quickly expand their capacity.

Also, spiraling costs of steel and plastic make it difficult for smaller companies to compete with larger suppliers who can absorb the increased production cost to some extent, or can get better deals from material suppliers.

For example, Guangdong Kelon preordered its entire sheet steel requirement for 2005 just before Shanghai Baosteel Group Corp., the main steel supplier in China, announced an almost 11 percent increase in prices of steel sheets. The refrigerator maker will now be able to maintain product prices throughout the year.

The pressure is expected to continue on small suppliers as raw material costs are expected to increase up to 20 percent in the next 12 months.

In addition, large companies have ready access to compressors, which are in short supply. Although, the shortage is not as severe as air conditioner compressors, it is enough to create an imbalance in the industry.

Lastly, the majority of refrigerator exports are to OEM buyers in North America and the European Union, who prefer to partner with large makers with easy access to raw materials and components and well-established R&D departments.

Samples of supplier profile

Changzhou Pookin Electronic Science & Technology Co. Ltd
Changzhou Pookin is one of the largest manufacturers of energy-saving lights, decorative lights and fiber lights in China. It also produces midrange and high-end portable thermoelectric coolers and warmers, which accounted for US$5 million of its total annual sales for 2003. Of this amount, US$4.6 million came from overseas markets.

The company has a monthly output of about 30,000 units of thermoelectric coolers and warmers, which it develops with a partner in France.

In 2003, the company's exports of coolers and warmers grew by 50 percent over the previous year. Its products are mainly shipped to customers in the United States, Canada, France, Germany and Italy. OEM orders represent 80 percent of exports.

Products
Changzhou Pookin funnels 1 percent of annual sales to product development, with five to eight new designs of portable refrigerators released every year.

The R&D team has eight design specialists who focus on optimizing product structure, enhancing cooling efficiency and improving housing. They use local and international 2-D and 3-D software packages.

The company works in partnership with a leading design firm in France to co-develop products that are in keeping with trends in Europe and the US.

Thermoelectric coolers and warmers are available in sizes ranging from 2 to 30L, and sell for US$15 to US$36. Models for cars are chest and upright types. Two or more compartments are added on top of the units to hold cans or cups.

High-end models take up 60 percent of Changzhou Pookin's output. They are equipped with electronic display and controls, and feature metallic and silver finish. Prices range from US$28 and up. The metallic and silver finishes cost US$2 to US$3 more than ordinary coatings.

Midrange models account for the remainder of production. Units in this range have ABS housings and manually controlled switches.

All portable refrigerators from the company have CE, GS and UL approval. ABS for housing is sourced from Jiangsu and Zhejiang provinces, and semiconductors from Guangdong province and Beijing. Inner shells are made of aluminum. Foaming material is polyurethane and the refrigerant used is HCFC-141b.

Manufacturing
The company's 30,000sqm factory has three assembly lines with an average monthly capacity of 40,000 units. It has six metal processing machines, including milling machines and drill presses for the maintenance of molds. It subcontracts mold making to suppliers in Guangdong, Zhejiang and Jiangsu.

Before assembly, the housings are covered with a layer of cling film to prevent scratches during the process. Foaming is done with 2 PakPro foaming machines imported from the US. It takes approximately 10 minutes to process a 30 to 40mm-thick foam layer. Metal sheets are used to secure the shapes of outer shells during foaming.

Sample of product gallery

Household refrigerators Bestever Group Model: BWC-28B Minimum order: One TEU Packaging type: Carton Delivery time: 15 days Indicated price: — Description: Capacity 750mL; dimensions 460x735x540mm; temperature 12C to 18C; thermoelectric; power input 70W

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Global Sources Industry-specific China Sourcing Reports

All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.

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