With domestic consumption sluggish and the home appliance industry facing headwinds, Haier Smart Home managed to buck the trend in the first half of 2024. Against a backdrop of uncertainty, the company’s latest financial report shows resilience. Revenue rose 3.03% year-on-year to RMB135.62 billion (US$19 billion), while net profit increased 16.3% to RMB10.42 billion (US$1.5 billion). Among China’s leading home appliance makers Haier, Midea and Gree, it was Haier that led the profit growth.
This success didn’t happen in a vacuum: while a shift upmarket helped, the company’s expansion internationally proved game-changing.
In the first half of 2023, Haier’s overseas revenue ballooned to RMB 70.82 billion (US$9.9 billion), up 3.7% year-on-year. Regions such as South Asia, Southeast Asia, and the Middle East and Africa recorded growth rates of 9.9%, 12.4% and 26.8%, respectively. With more than half of its total revenue now coming from overseas markets, Haier’s global strategy is paying off big time.
One notable move was Haier’s acquisition of Electrolux’s South African water heater business in July, marking a major step into emerging African markets. But this is just the latest chapter in Haier’s long-running strategy to expand into the continent.
Haier has broken ground on a USD 160 million eco-industrial park in Egypt in 2023. Due to be operational by the first quarter of 2024, the park will span approximately 200,000 square meters and will be the company’s first digital twin facility in the Middle East and Africa. With an annual production capacity of over 1.5 million units, it supplies home appliances to markets in Africa, the Middle East and Europe. After two decades on the continent, Haier’s African adventure is moving to a new phase, one that is likely to be more complex as it seeks to deepen its presence.
Doubling investment in South Africa
Since 2021, Haier’s overseas revenue has consistently exceeded domestic sales, and its growth rate overseas has far outpaced its performance in China. By 2023, approximately 52% of the company’s total revenue will come from overseas markets, with outstanding performance in North America, Japan and Europe. In the United States, subsidiary GE Appliances has been the fastest-growing home appliance brand for the second consecutive year. In Japan, Haier leads the white goods market, and in Europe, the company’s Fisher & Paykel brand has topped the growth charts for the eighth consecutive year.
The company’s strategy for capturing international markets is clear: acquire well-known local brands to quickly establish market share and increase brand awareness. These acquisitions allow Haier to leverage its existing sales channels and resources to accelerate its global expansion.
In South Africa, this approach came to fruition in July when Haier signed a deal with Electrolux to acquire its South African operations for ZAR 2.45 billion. Electrolux had carved out a niche in the water heater market around its Kwicot brand, a staple in South African homes for over a century. Kwicot’s strong sales network and after-sales service gave Haier an immediate foothold in the local water heater market, as well as the opportunity to cross-sell a wider range of home appliances.
Haier entered Africa in 1998. As part of a broader globalization strategy, the company established a strong brand presence in the region early on by localizing research, manufacturing, and marketing activities. In Nigeria, for example, the company developed products designed specifically for the local market, such as freezers that can keep food frozen for 100 hours during a power outage and generator-powered air conditioners. These innovations were well received and strengthened Haier’s brand across Africa.
By 2001, Haier had air conditioner manufacturing bases in Algeria, Nigeria and Tunisia. The company established a trading company in Egypt in 2019 and shifted its focus to building a premium local brand by 2020. Haier’s influence in Africa extends beyond home appliances, with Haier Biomedical setting up vaccination stations and solar-powered mobile clinics to support medical care in underserved areas.
Entering the African white goods market
Africa’s home appliances market, while still developing, has huge potential. Statista predicts it will reach US$61.36 billion in 2023, growing at a compound annual rate of 7.53% until 2028. South Africa plays a pivotal role, with the country’s home appliances market expected to reach US$3.64 billion by 2024, growing at a compound annual rate of 6.55% until 2029.
This surge in demand is primarily driven by rapid urbanization, population growth and rising disposable incomes. As Africa’s middle class expands, so too is the demand for premium home appliances, especially in markets such as South Africa and Egypt. Haier’s financial reports show robust growth in Africa, particularly in the areas of water heaters and home appliances. Rising incomes and economic growth have put the company in a good position to capture a larger share of the market for home appliances, especially in refrigeration and other key areas.
Reliability is a must for African consumers. The continent’s unreliable power supply makes energy efficiency a top concern when choosing home appliances. Haier products, such as air conditioners designed to run on backup generators, are in high demand. Government programs promoting energy-efficient products are also driving sales as consumers seek out appliances that address the region’s unique energy challenges.
Chinese brands such as Haier, Gree and Midea dominate the African home appliance market due to their manufacturing scale and cost advantages, but they face stiff competition. Gree has introduced solar-powered air conditioners to address Africa’s energy supply problems, while Midea has also customized its products to local conditions, providing air conditioners that perform well in coastal areas and can easily handle voltage instability in West Africa.
But the African electronics market is highly competitive, with brands from South Korea, Europe and other countries vying for market share. As infrastructure improves and the region opens up further, the battle for market share is only set to intensify.
KrASIA Connection translates and adapts content originally published on 36Kr. This article was written by Lin Qingqing of 36Kr.
