100 billion heating market, "secret war" coldest Spring Festival
Release Time :2022/02/09
Reading Times :608

       Typhoon embryos, water vapor, and cold air are rushing out. In recent days, many places in China have ushered in the largest range of rain and snow this year. And under the fierce wet and cold magic attack, the coldest Spring Festival in a few years has come.

       At this time, the voice of "unfair heating in the south" resounds throughout the network again, reflecting the huge demand for heating in areas lacking central heating in China.

       In the next ten years in the south, there will be a heating market of hundreds of billions of dollars? On the basis of improving living conditions, people's desire for warmth in winter also increases sharply. It seems that various companies are interested in capturing this seemingly good business in the heating market.

       But behind people's general demand for heating, the heating market has also shown a rather subdivided trend from many aspects. According to the statistics of Yiou.com, there are currently four categories and dozens of products for heating appliances in the heating market; consumers in different regions also have different inclinations for various heating appliances.

       In this unprecedentedly cold Spring Festival, is the heating market, which is known as 100 billion, and has launched a "secret war", is it worth being optimistic? This article will explore this issue from the following aspects:

       1. There are various categories of heating equipment. Are the most common heating appliances really so easy to sell?

       2. For companies engaged in heating equipment manufacturing, what trend does the heating business show and how much does it contribute to the overall performance?

       3. What do consumers value more when purchasing heating equipment, and can the current market meet their requirements?

       There are many types of heating equipment, not so easy to sell

       Liu Yang, who stayed in Wuhan for Chinese New Year this year, bought a split heater early last month. He told me that after the temperature dropped sharply below 5 degrees at one point, he turned up the heating temperature of the air conditioner, but the room became extremely dry as a result. After using the heater, his daily body in the room feels much more comfortable.

       In this winter, there are not a few users like Liu Yang who buy heating appliances in pursuit of a more comfortable body feeling, and many even started preparing during the Double Eleven.

According to data from JD.com, from October to November 15 last year, the sales of platform heating equipment exceeded 4 million units. Tmall data shows that during the Double Eleven last year, the turnover of graphene heaters increased by more than 150% year-on-year, and the number of sales increased by nearly 200% year-on-year.

       At present, in the area south of the Huaihe River in Qinling Mountains where there is no central heating, the mainstream heating equipment is divided into air-conditioning heating, gas wall-hung boilers, heating appliances and other small heating items. However, due to the impact of air conditioning heating on indoor humidity, as well as the cumbersome and high cost of installing gas wall-hung boilers, heating appliances with relatively low prices seem to be closer to the mainstream.

       And heating appliances are divided into skirting heaters, European-style fast heating stoves, electric oil heaters, electric heating film heaters, fan heaters, infrared heaters, small sun, electric stoves and other specific products, many categories Somewhat dazzling.


1

The categories of heating electrical products of the three domestic giants Figure / Yiou.com

       

       However, in terms of offline sales, among the dozens of heating appliances, only three or four are relatively well-sold, and since most of the "heating appliances" can only be sold for one quarter, neither the store nor the brand side Willing to stock up too much.

       In a home appliance flagship store located in Wuchang District, the salesperson in the heating appliance area told me that since the beginning of winter, skirting heaters and electric oil heaters have been selling better, and recommended me a price of 1299 Yuan's split baseboard heater.

       However, this 1299 skirting heater is not enough to cover the heating needs of the whole house. When answering the question about the area of use, the salesperson said that a single heater is normally recommended to be used in a room of about 15 square meters. Well, no more than 20 flats.

       When I asked about relatively cheap categories such as Little Sun, infrared heaters, etc., she said that such electrical appliances are sold more online, and basically no users come here to buy them, and these electrical appliances still have certain security risks.

       In the huge electrical appliance store, although there are many types of heating appliances, the overall area occupied is only the same size as a brand TV showroom.

       Unlike air conditioners, water heaters, and other electrical appliances that are used for at least half a year, heating appliances generally do not last longer than a quarter. Therefore, the home appliance stores here generally put heating appliances on the shelves around November, but they will be removed from the counter after March.

       The only exception may be the heater. The salesperson in the home appliance store pointed to a Midea heater and said that in addition to being a heating appliance, the heater also has a humidifying function. When it is not so hot in summer, it can also be adjusted to ordinary fan mode and used as a cooling fan.

       But the price tag next to the machine shows that the price of this heater is 2999 yuan, which is not only more than double the price of the baseboard heater recommended before, but even more expensive than many first-line brands of 1.5-horse air conditioners. In terms of, I am afraid it is difficult to be favored by most users.

       The boom in offline heating appliances does not seem to be as expected. By studying the online consumption data, it can be found that people's needs for warmth in winter are not all solved by heating appliances, and many small local heating products are also listed as "heating equipment" in the market.

       On November 23 last year, JD.com released a "Cold Protection Consumption Trend". The data shows that many local heating products also have high heat, such as electric heating moxibustion and moxa leaf velvet waist support, warm table mat, heating insole, foldable The turnover of foot warmers and other products has increased by more than 100% year-on-year.

       When searching for these products on JD.com, most of the unit prices are less than 100 yuan. For example, the heating insole is as low as close to 1 yuan per piece. The technical content of the product is not high, and the profit margin is not large.

       In addition, the tendency of different cities to heating methods also affects the sales of heating appliances. According to the "Cold Consumption Trends", the proportion of consumption using electrical appliances for heating in unheated areas such as Guizhou, Hunan, Shaanxi, and Chongqing is higher than the national average by more than 60%.


3

The proportion of electrical heating consumption in some areas is high

  

       However, in Jiangxi, Shanxi and other places, residents pay more attention to the consumption of heating clothing such as down jackets and plush coats. In Chongqing, Zhejiang, Anhui and other places, the consumption of local "precise" heating products such as electric heating waist support, warm table mat, and heating insole is relatively high.

       From the perspective of consumer use, it is not difficult to find that heating appliances and local heating products perform their own duties, and which one to choose depends more on the preference of regional consumers for direct feedback on warmth. Small and medium-sized heating appliances such as skirting heaters and electric heaters can meet the heating needs of a single room, but the heating feedback to consumers is less direct than that of waist support and table mats.

       For companies that intend to enter the heating equipment market, local heating products are obviously not as profitable as heating appliances due to their low cost and low sales price. The allure of making heating appliances may be much greater than these small products.

       However, the specific way to enter the game still needs to be determined according to the preferences of consumers in different regions for heating methods. At least in some areas, heating appliances are actually not so easy to sell.

       Specializing in heating equipment may not be a good business

       Then, what is the development status of the companies that currently occupy the main market share of heating equipment? What trends can these pioneers in the heating market reveal to companies who intend to enter the market?

       According to the statistics of Aowei Cloud in 2021, for the whole year of 2020, the top five in the domestic heating appliance market are Midea, Gree, Emmet, Pioneer and TCL. In addition to Midea and Gree, the two comprehensive home appliance giants, Panasonic, Haier, Oaks, Mijia and other brands in the top ten are also comprehensive home appliance companies. In other words, heating appliances belong to the subdivisions of these companies "going into the game", rather than their main direction of attack.


5

Aowei Cloud's 2020 Heating Appliance Brand Market Share Parity Mapping


       Emmett and Pioneer, the top ten companies that are relatively focused on heaters, have also expanded their home appliance territory in recent years. In addition to manufacturing heating appliances, electric fans and other two-season products, it is also developing and selling air purifiers, dehumidifiers, vacuum cleaners, steam mops and other small household appliances. This business layout also highlights the current limitations of the heating appliance market.

       Taking Emmett, which has a higher market share among the two, as an example, Emmett’s 2020 annual report shows that its electric heater revenue dropped from NT$2.558 billion in 2019 to NT$1.937 billion in 2020.

       The proportion of electric heaters in Emmett's annual revenue dropped from 25.22% in 2019 to 21.04% in 2020, and the annual output also decreased by 50% from 1.79 million units in 2019 to 880,000 units in 2020. In addition, although Emmett has 20 series of electric heaters, the number of 353 products is only 55% of the 646 products of its other major business, electric fans.


6

The proportion of electric heater revenue has dropped significantly. Figure / Emmett Annual Report


       While the proportion of the electric heater business has declined, Emmett's revenue in the electric fan business has maintained a proportion of 64% in the two years from 2019 to 20, and has not seen a significant decline; the revenue of small household appliances has increased from 431 million to 833 million, the proportion of revenue increased from 4.25% to 9.05%.

       Even for a company like Emmett, which is regarded as focusing on heating appliances, the related indicators of its heating appliance business do not account for a considerable proportion of the company's overall business, and show a downward trend in many aspects. The trade-off between heating and small electrical appliances business also highlights the difference in usage time and scenarios between heating appliances and household appliances.

       Even Emmett himself said in the annual report that in the future, it is necessary to reduce the factors affecting the season, avoid watching the sky, and reduce the revenue gap in the off-peak season by rejuvenating the brand and launching more new products such as small household appliances.

       In addition, Qichacha data also shows that in the past three years, the number of new heating appliance companies in China has shown a downward trend, from 1,282 in 2019 to 843 in 2020, and only 342 in 2021.

       In addition to the heating appliance market, "Cold Consumption Trends" shows that gas wall-hung boilers have been the category with the fastest growth in consumption since November last year, with a growth rate of 586%. There are also many companies competing in the domestic wall-hung boiler market.

       Among them, the foreign brands selling gas wall-hung boilers include Germany's Vaillant, Viessmann, Japan's Rinnai, etc., and the domestic brands include Haier, Midea, Macro, Wanhe and so on.

7

The proportion of online market sales of wall-hung boilers in 2021


       Most of the above-mentioned foreign brands focus on the field of gas heating, and their business revenue is relatively considerable. For example, Linnei's revenue in the latest fiscal year reached 22.7 billion yuan, and Vaillant's revenue in the latest fiscal year was 18.4 billion yuan. However, its income not only includes gas water heaters with higher utilization rates, but also is related to the nearly 80% penetration rate of wall-hung boilers in developed countries and regions.

       As for China, data from the Huajing Industry Research Institute shows that the penetration rate of domestic wall-hung boilers is less than 15%. The better performance indicators of foreign brands of wall-hung boilers for heating are obviously not strongly related to the domestic market.

       Most of the domestic-funded wall-hung boiler brands in the market are no different from the brands in the heating appliance market, and they do not take heating equipment as their main or core business. Haier and Midea are comprehensive home appliance companies covering multiple fields, and brands such as Macro, gas wall-hung boilers are not their important business segments.

       The only exception among many brands may be Wanhe. Wanhe’s 2020 annual report shows that its domestic hot water business including gas wall-hung boilers is its second main business, with revenue of 2.841 billion yuan, accounting for 45.32% of total revenue. %.

       However, this proportion and amount have decreased compared with 2019. In 2019, Wanhe's domestic hot water business revenue was still 3.356 billion yuan, accounting for 53.95% of the total revenue, making it the company's largest business; but in 2020 After the annual domestic hot water business suffered a downturn, its largest business has been replaced by the kitchen appliance business with a revenue of 2.992 billion, accounting for 47.72%.

       The sales volume and production volume of Wanhe domestic hot water products also showed a downward trend in 2020. The sales volume dropped from 5.028 million units in 2019 to 4.742 million units in 2020, a year-on-year decrease of 5.68%; the production volume decreased from the previous 5.078 million units. Taiwan dropped to 4.54 million units, down 10.61% year-on-year. The sales and production of kitchen appliances increased by 11.29% and 22.47% respectively.


8

The two major businesses of Wanhe domestic hot water and kitchen appliances are changing and growing. Figure / Wanhe 2020 Annual Report


       In addition, the proportion of cost invested by Wanhe in the domestic hot water business was also overtaken by the kitchen appliance business that year. Among them, the cost of raw materials dropped from RMB 1.726 billion to RMB 1.612 billion, and the cost of raw materials for kitchen appliances increased from RMB 1.579 billion to RMB 2.008 billion.

       However, the gross profit margin of Wanhe domestic hot water products is as high as 35.58%, which has a certain advantage compared to the 20.81% gross profit margin of kitchen appliances.

       But overall, Wanhe's emphasis on domestic hot water products, including wall-hung boilers, is clearly declining. This also reveals that the popularity of heating methods such as wall-hung boilers combined with hot water heating will take time, and it has not been favored by Wanhe at present.

       Judging from the situation of the above-mentioned enterprises engaged in the manufacture of heating equipment, heating appliances are affected by various factors such as the time limit of use, and their income-generating ability is difficult to support the enterprise as the main business, and more as a layout for subdivisions.

       Although the gas wall-hung boiler can meet the hot water demand of the whole house at the same time, it is more promising than a single heating appliance. However, its penetration rate is still linked to the living standards in different regions. In fact, most of the current cities in China do not have the environment for large-scale promotion of gas-fired wall-hung boiler heating.

       Just focusing on manufacturing heating appliances or gas wall-hung boilers may not be a good business at the moment.

       What do we need to warm up the winter?

       For heating equipment users like Liu Yang, although heating at low temperatures is just a requirement, the cost of purchasing and using heating equipment is also an important factor to consider when choosing a heating method.

       Liu Yang told me that he spent 899 yuan to buy this split heater. In the past month, he basically turned it on when he got home from get off work, and turned it off after getting up in the morning. Last month's electricity bill was about 200 yuan more than before, although it was a bit expensive, it was within an acceptable range.

       In large appliance stores, the price gap of different heating appliances is obvious. The price of a single small electric heater is less than 200 yuan, the price of electric oil heater is 500-1000 yuan, the price of skirting electric heater is 800-1500 yuan, and the price of fan heater is more than 2000 yuan.

       The up-front cost of using a wall-hung furnace and a radiator for the whole-house HVAC solution is the highest. Parity asked the sales staff of AO Smith and Macro. The price of AO Smith's single wall-hung furnace is more than 10,000 yuan, and a set of radiators is 2,000-3,000 yuan. The whole house needs 3-4 sets, and the total price is close to 20,000 yuan. Macro's wall-hung boilers cost about 7,000 yuan, and a set of radiators costs 1,500 yuan, with a total price of more than 10,000 yuan.

       As for the energy consumption of the two, the salesman bluntly said that the power consumption of heating appliances is "definitely relatively large" and "it is impossible not to consume electricity". The nameplates of many heating equipment show that their power is mostly around 2000-2500W.

       However, although the power of heating appliances is not low, the electricity bills that need to be spent at low temperatures are still lower than that of air conditioners for heating; most air conditioners face a sub-zero environment. After turning on the heating mode, not only the compressor Work, but also need nearly 1000w of electric auxiliary heating to assist heating.

       Gas wall-hung boilers are different from small and medium-sized heating appliances. The main energy consumed in their work is natural gas, and the power consumption is negligible compared to heating appliances. If the radiator is turned on for 10 hours a day, the gas consumption is about 6-9 cubic meters. In the Wuhan area, the first-grade gas price is 2.53 yuan/cubic meter, and the second-grade gas price is 2.78 yuan/cubic meter. The additional monthly cost of heating the whole house is expected to be around 500 yuan.

       In addition, when choosing a gas wall-hung boiler for heating, after-sales maintenance costs must also be considered.

       Yang Chao, who used a combination of a wall-hung boiler and a radiator when he bought a house for decoration six years ago, told me that the wall-hung boiler he chose, the official after-sales price quoted for a single cleaning of the wall-hung boiler is about 400-500 yuan, and the radiator cleaning cost is More than 150 yuan, maintenance is required every one to two years, and the cost of two maintenance is equivalent to the price of the most popular category of baseboard heaters in heating appliances.

       Compared with the combination of heating appliances and wall-hung furnace radiators, the use cost of small heating items is almost negligible. The price of e-commerce platforms searching for table warming pads, hot water bottles, and foot warmers is mostly below 200 yuan, and there is no other follow-up. cost.


11

Taking the table warmer as an example, the price is basically within 100 yuan. Screenshot of parity


       Comparing the cost and scope of application of the above heating equipment, it is not difficult to find that each has a precise target consumer, but it also has certain limitations, and there is no universal equipment category for the time being.

       For example, wall-hung boilers can satisfy consumers' whole-house heating, and are becoming the choice of many users who are new to new houses.

       Although the procurement cost of heating appliances is moderate, its coverage is slightly insufficient. The budget of about 1,000 yuan is relatively friendly to most users who need heating, but when the user's heating demand changes from a small area of a single room to a large area of the whole house. Users can only choose to increase the number of electrical appliances or turn to the purchase of wall-hung boilers, which brings secondary expenses.

       And low-cost small heating items, although the lowest cost, but also the smallest heating range. It is more of a helpless choice for consumers with low requirements for heating or insufficient budget. This category cannot even meet the heating needs of the whole body, and it is also the most replaceable category.

       From this point of view, the heating equipment market seems to have sufficient choices for consumers, and there is also a significant consumption upgrade trajectory to follow. But so far, heating equipment that can meet the needs of consumers in terms of area of use, cost of use, and heating effect has not yet appeared.

       However, the purchase of medium and high-priced heating equipment represented by wall-hung boilers/radiators is accompanied by the demand for new house decoration, and the cost reduction brought about by the maturity of the industrial chain in the future. In the future, it is most likely to be close to the overall needs of consumers. certain room for development.

       written at the end

       Affected by the aging of use and the climate in different regions, the heating market is actually in a rather embarrassing situation at present. Due to the general foundation, it is still difficult to grow into a huge market in the short term. At the same time, the competition of different types of heating equipment is not fierce compared with other fields, but it is more complementary and meets the needs of different groups.

       Because the use time of a single heating appliance is not long, users generally do not want to spend too much cost. And wall-hung boilers can take into account both hot water demand and heating demand, and can be applied to equipment in four seasons, but limited by housing conditions and the current consumption level, it is difficult to become mainstream in the short term, and it can only be used by qualified families when they decorate their new houses. main choice.

       For companies in the heating market, it is currently difficult to support the overall revenue by specializing in the manufacture of heating equipment. Heating equipment can only be used as a category more often. While enterprises seize the heating market, it is more important to develop in an all-round way.

       With the improvement of consumption level and the trend that consumers pay more and more attention to heating in winter, in the long run, the heating market still has a broad space for growth in the future. After all, the warmth brought by the heating equipment is also a kind of New Year's taste in the Spring Festival with snow and gluttony.


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