Easily sailing through the economic tsunami and boosting sales by nearly 50 percent over last year is a daydream for most companies these days, but there's a happy exception to the storm clouds enveloping industries such as banking, real estate and automobiles.
The exception is Galanz, a leading microwave producer based in Guangdong province, that announced recently that its sales rose by 47 percent in the past 11 months from a year earlier, and with an over 40 percent rise in exports.
Its small appliances also reached a 127 percent growth on a year-on-year basis.
"The 'Potato Effect', referring to buying necessities like potatoes tends to get larger during a recession and it greatly contributes to Galanz's rise during this financial crisis," says Yu Yaochang, the deputy director of Galanz.
The sharp rise in small appliance sales can also be largely attributed to their growing proportion in the company's overall business.
"On the whole, we are doing pretty good," says Yu. The company is also taking advantage of the financial crisis by expanding its team in North America, Japan and South Korea by hiring experienced professionals at lower salaries.
"The crisis is bringing more opportunities than challenges for a steady-paced or even conservative enterprise like us," Yu adds.
Galanz is not the only one to with good news.
"There is enormous increase in the exports of Chinese-made small home appliances like rice cookers, roasting pans, coffee machines and electric kettles," says Zhang Xiaoming, director of Guangdong Household Electrical Appliances Trade Association. "The sales of soya milk makers and juice extractors are also sharply rising," Zhang says.
Low prices contribute to some of the increases, but the paramount reason is that "instead of dining out, people now prefer to stay at home and cook, analysts say.
Vanward, a gas appliance exporter in Guangdong province, has seen a 40 percent increase in exports this year. Energy saving and efficient products are especially favored by overseas markets, says Li Huizhen, deputy manager of Vanward Brand Department.
Another leading small appliance producer Joyoung has also posted a pleasing third quarter report. With over 128 percent in revenue growth in the first three quarters of 2008, the Shandong-based soya milk maker manufacturer is obviously going against the economic trend.
And many analysts are optimistic about small home appliances in 2009. Zhu Lijun, an analyst with China Galaxy Securities, forecasts that the growth of listed small home appliances producers will be 32.2 percent in 2009, almost tripling the expectation for the general home appliances industry growth of 10.78 percent.
Zhu says, the price of raw materials, including copper, aluminum and steel, have plummeted in 2008 and will be still in decline next year, therefore manufacturing costs will remain lower.
Emerging markets will be a new growth point for China's small home appliances exporters, as the traditional target market will remain bearish, analysts say.
"The Russia and India markets are rising enormously and the Middle East and South America will also count," Zhang says.
Galanz is branching out overseas with destinations including Turkey, Vietnam and Brazil.
The expanding domestic market will also serve as an engine for the industry. "The government is taking measures to boost domestic consumption in the hopes that it will replace falling exports." Zhu says.
However, not everyone in the industry can share the cake. China's small home appliance producers now amount to over 5,100, over half of which are based in Guangdong province, around 20 percent in Yangtze River delta and the remaining few in other regions.
Overall home appliances exports in the first 10 months of 2008 registered a large drop of 65.1 percent from a year earlier due to the bad sales, according to the statistics recently revealed by General Administration of Customs of China.
Currently, China's small home appliances account for almost 80 percent of the global trade.
"The small home appliance exports will also slow along with the economic recession in developed countries," says Zhang.
Thanks to the sharp depreciation of the South Korea won, many Chinese factories are losing overseas orders and foreign vendors are turning to Korean products.
"It is time to adjust the industrial structure and profit mode. When investment and size do not help, technology and innovation will be the prerequisite for further development," Zhang says.
(China Daily December 22, 2008)
