Home appliance inventories in China have surged during the COVID-19 period as the country’s pandemic containment measures hurt consumers and their spending.
Nikkei Asia reported that inventories at five home appliance manufacturers in China doubled during the “zero-COVID” restrictions.
Nikkei said that it compiled the earning statements from six groups. They are Gree Electric Appliances, appliance manufacturer Midea, refrigerator maker Haier, TV supplier TCL Electronics, and two Hisense group companies.
They show that their combined inventories were 98 billion yuan ($14 billion) as of the end of June, which doubled over three years.
That figure also represents an increase of 15% from a year earlier.
Their earnings statements indicate that inventories grew faster than revenues.
In the first half of this year, Gree Electric Appliances, which produces air conditioners, saw revenue up 5% on-year, while its inventory jumped 28%.
In the retail sector, home appliance inventories also increased.
Nikkei found that at China’s big two retailers, Gome Retail had an inventory turnover period of 81 days in the first half this year, or 50% longer than three years earlier.
At Suning, the inventory turnover period was 50 days in 2021, or 25% longer than in 2020.
The home appliance market had been growing at double digits until around 2010 thanks to strong consumer spending.
However, the COVID pandemic raging in China since 2020 has discouraged consumers, retailers, and manufacturers.
Even before the pandemic, Chinese manufacturers had scrambled to gain market share, leading to excessive production capacity.
With bigger inventories, COVID lockdowns, and weak consumer spending, the home appliance market has been facing difficulties.
Nikkei, citing data provider All View Cloud said that China’s retail sales of appliances were 338.9 billion yuan ($49.41 billion) in the first half of 2022, down 9% year-on-year.
All View Cloud President Guo Meide said that China’s appliance market has used up its population growth and economic expansion, and now faces prospects of contraction.
With numerous challenges, China’s major home appliance players could shed their operations, staff, and distribution contracts.