Chapter 5: Industry & Marketplace

5.1 Definition of the Industry
A major appliance, or domestic appliance, is usually defined as a large machine which accomplishes some routine housekeeping task, which includes purposes such as cooking, food preservation, or cleaning, whether in a household, institutional, commercial or industrial setting. An appliance is differentiated from a plumbing fixture because it uses an energy input for its operation other than water, generally using electricity or natural gas/propane. An object run by a watermill would also be considered an appliance.

5.2 Development of the Industry
The Group will continue to leverage on the favorable national policies of “Rural Area Subsidized Electrical Appliances Purchase Policy” and “Home Appliances Replacement Policy” to explore the inherent potential of 3rd and 4th tier markets, expand the networks of marketing, logistics
and service, and further strengthen the penetration to these markets by expanding into counties, towns, villages. In addition, amidst the highly competitive business environment, the Group will consistently make improvement and continue to create immense value for customers by providing quality, cost-efficient and thoughtful products with its innovative research and development, tailored designs and effective operational strategies.

5.3 Shape of the Industry
The white goods market sector experienced strong growth between 2006 and 2007, with an increase of 11.5% over the year. In terms of volume, the market grew 9.4%, from 2006 to 2007. However, in the subsequent two years, growth was much slower.

Overseas-based manufacturers of white goods, with UK operations, have been benefiting from the highest growth rate in the industry since the late 1980s.

In terms of value, home laundry appliances remain the largest sub-sector, as it has been over the last few years. Cooking appliances was the second largest of the sub-sectors analyzed within this report. Of course, the fastest moving product line within this sub-sector remains the microwave oven.

In terms of volume, the largest white goods product line was that of washing machines. The next largest sector by volume was microwave ovens. Fridge-freezers, as with value, came third.

5.4 Marketplace Analysis
THE consumer durables sector is set to close the current financial year with 12% growth, 0.5 percentages point more than the growth registered last fiscal, according to a Ficci survey. The survey is based on feedback from the consumer durables industry, allied industry organizations and government agencies. Technological improvements, falling prices due to competition, aggressive and innovative marketing and declining import tariffs have contributed to the strong growth. The survey has projected that the market for non-IT consumer durable goods, estimated at Rs 35,000 core in 2006-07, is expected to achieve 12% growth in the current year. According to the survey, many high-end products such as LCD TV, MP3, DVD, split air-conditioner, high end washing machine do not find place in the list of items covered by the Central Statistical Organization (CSO) for calculating official data. These items, however, have seen impressive growth. The sectors which are projected to achieve ‘excellent’ growth rates of more than 20% in terms of units manufactured are air-conditioner (25%), split air-conditioner (60%), frost-free refrigerator (54%), washing machines (20 %), fully-automatic washing machine (35 %), microwave oven (35 %), high-end flat panel TV (100 %) and DVD (25 %). The sectors which are expected to record high growth rates between 10% and 20 % are refrigerator (11 %) and color TV (15 %).