Global electronics trading: pattern seeking "opportunities" in the changed risk

Since the financial crisis in 2008, with the global economy continuing to slump, China’s home appliance export growth has slowed down. On December 2, 2015, at the "China Household Appliances Association General Meeting and the First Session of the Sixth Council," Hu Xiaohong, Director of the Information Consultation Department of the China Household Electrical Appliance Association, sorted out the global home appliance industry situation since the financial crisis and relied on the world situation. China's home appliance industry in the world market level "crisis" and "machine". The global household appliance market has steadily increased Although the global economy is still not completely out of the financial crisis and the market is recovering slowly, the overall consumer scale of the global household appliance industry is still showing an upward trend. According to Hu Xiaohong, in 2013, the total volume of household appliances import and export trade was 242.8 billion U.S. dollars, an increase of 5% year-on-year; the value of exports was 124.2 billion U.S. dollars, an increase of 6.3% year-on-year; the import value was 118.6 billion U.S. dollars, an increase of 3.7% year-on-year. "According to incomplete statistics, in 2014, the volume of global home appliances import and export was 249 billion U.S. dollars, an increase of 2.6% year-on-year, of which exports were 127.9 billion U.S. dollars, up 2.9% year-on-year; imports were 121.1 billion U.S. dollars, up 2.1% year-on-year. In 2013, the total volume of major household appliances increased by 3.4%, and small household appliances increased by 7%. In 2014, these two figures were 1.2% and 4.2% respectively. From the perspective of global development, large appliances have been the mainstay of industry growth, but its growth rate has slowed down significantly. Compared with 2007, the share of major home appliances trade in 2013 decreased by 5 percentage points to 55.7%. It is worth mentioning that the proportion of total air-conditioning trade decreased by about 2 percentage points, while the proportion of total kitchen appliances trade rose by 2 percentage points, becoming the largest product category. "Now that small household appliances are global products, the proportion of total trade has also increased from 10% to 56%." Hu Xiaohong said. In addition, the changes in product structure can also see the development trend of global home appliances. The increase of the refrigerator industry mainly relies on the refrigerator-freezer, and the compression-type refrigerator keeps a steady decline. The increment of the washing machine mainly comes from large-capacity products of more than 10kg, and the fully-automatic washing machines below 10kg perform smoothly. At the level of product import, the import of home appliances from developed countries is still showing a steady growth trend, and overall it is better than the performance of emerging countries. In 2014, the increase in imports of home appliances by the United States, the European Union’s core countries, Japan, and the BRICS countries was 6%, 9%, -2%, and -8.5%, respectively. In addition, the highlight of the home appliance export market in 2014 was Eastern Europe/Turkey, with export volume growing by 8.9% year-on-year, of which large appliances and small home appliances increased by 7.4% and 9.5% respectively year-on-year. China's household electrical appliance exports increased by 5.4%, Thailand/Korea/Malaysia by 4%, and Mexico by 2%. The status of major powers has been solid After 30 years of rapid development, China has no doubt about the status of the big household appliances in the global market. According to Hu Xiaohong, in 2014 China’s household appliance exports accounted for about 37% of the global export market. Among them, 31% for large appliances and 46% for small appliances. “You can see that starting from the financial crisis in 2008, regardless of major appliances or small household appliances, the proportion of Chinese home appliance exports in the global market has continued to rise, and continues to maintain its dominant position in the fields of air-conditioning, microwave ovens and small household appliances.” It is learned that in 2014, Exports of air conditioners and microwave ovens increased from 37% and 47% in 2007 to 58% and 63% respectively. The proportion of electric fans and electric toasters has reached 70% and 88% respectively. It is worth mentioning that the global market position of China's refrigerators and washing machines continues to rise. The proportion of export of large-capacity washing machines ranks first in the world, reaching 29%; the proportion of automatic washing machines exports is only second to Eastern Europe/Turkey, reaching 27%; the proportion of refrigerators and freezers exports is 17%, lower than Mexico and Eastern Europe/Turkey. Overall, China’s position in global trade is stable. In 2014, the proportion of home appliances such as refrigerators, air conditioners, large-capacity washing machines, microwave ovens, and vacuum cleaners increased in the US import market, but the proportion of small home appliances such as electric heaters, electric razors, coffee machines, and electric kettles declined. The world situation is changing Although China’s home appliance has a firm position in the world market, with the ever-changing world pattern, Chinese home appliance companies need to be alert. Since the financial crisis, the global home appliance industry has gradually faced a new situation. The characteristics of multipolarization are increasingly apparent. In the past, the global home appliance industry has been dominated by the core countries of the European Union, the United States, Japan, and other developed countries. However, now, regardless of production, or import and export, the new economies have occupied an increasingly important position in this market. The rapid development of emerging economies and rising economic status have been recognized by the global community. Take the BRICS countries as an example, the total volume of home appliance import and export trade in 2014 was 58.7 billion U.S. dollars, accounting for about 23% of the global total. In addition, the regional economy has an increasing impact on the world economy. The coexistence of global market integration and regionalization is a major feature of the world economy. Regional cooperation groups, free trade zones, complete customs unions, common markets, and currency unions have gradually shifted from trade preferences to free trade zones, and from free trade zones to customs unions. At present, the world's regional economic groups mainly include the North American Free Trade Area, the European Union, the ASEAN Free Trade Area, the Southern Common Market and the Gulf Common Market. In 2014, the above-mentioned five regional economic groups imported home appliances from China reached respectively 14.8 billion U.S. dollars, 12 billion U.S. dollars, 3.5 billion U.S. dollars, 2.8 billion U.S. dollars and 2.4 billion U.S. dollars. The Transatlantic Trade and Investment Partnership Agreement (TTIP) and the Trans-Pacific Partnership Agreement (TPP) are still under negotiation and are also worthy of attention. In 2014, China’s total exports of TPP/TTIP appliances totaled 36.8 billion U.S. dollars, accounting for 63.4% of China’s total home appliance exports. Chinese home appliance companies should focus on the main region's own trade agreement strategy. At present, these regions are moving from the traditional sense of eliminating tariff barriers, opening up investment and services to various types of trade barriers consisting of rules and product technology standards. The important objectives of the TTP and TTIP negotiations are to reconstruct the global economic and trade rules, curb the rise of power in emerging powers, and delay the speed at which the international system shifts power. The geopolitical risks are constantly escalating, the scope is expanding, and the impact on the world economy is also increasing. The influence of geopolitics on home appliance trade is more self-evident. The Middle East is one of the major export markets for air conditioners in China and accounts for about 20% of China's air conditioner exports. Under normal circumstances, Iran and Iraq’s imports from China are in the range of 500 million to 700 million U.S. dollars, while the import volume during the period affected by the war and sanctions is only 100 to 300 million U.S. dollars. “The import value of Chinese home appliances from Islamic regions in West Asia and North Africa is 6 billion U.S. dollars, accounting for 10.2% of the total,” said Hu Xiaohong. In addition, due to the geopolitical impact on the economic recession, the devaluation of the ruble, and the shrinking of the market, in Russia, the import of home appliances fell in an all-round way in 2014. The value of imports fell by nearly 18%. The value of imports from China fell by 15%. The decrease in imports from China was closer to 50 in 2015. %. It must be said that Ukrainian imports of household appliances from China fell by 37% in 2014, and the decline in 2015 was more than 60%. In addition, the manufacturing industry in developed countries returns, and the rise of manufacturing industries in emerging countries should also be of concern to Chinese companies. In 2014, Germany’s share of the US electric razor import market increased from 7% in 2010 to 25%. Meanwhile, 8 countries in Eastern Europe’s electricity exports reached US$11 billion, an increase of 9%. Exports of home appliances increased significantly in Thailand, Turkey, Russia, and India. Opportunities still exist Although the world economic situation is sluggish, China’s home appliance exports have gradually returned to calm, but the opportunities for the Chinese home appliance industry in the world market still exist. Leveraging on the country’s diplomatic strategy, China’s home appliance exports will open up new channels. The concept of “One Belt and One Road” brings new opportunities for development to the Chinese home appliance industry. It is reported that along the "One Belt and One Road" is 66 countries, including ASEAN, Central Asia, West Asia, and South Asia, which account for about 18% of China's home appliance exports. “In recent years, China’s home appliance exports to these regions have maintained an increase of about 9%, and there is still great potential for development.” Hu Xiaohong said, “More importantly, the “Belt and Road” will open up new land transportation logistics channels, shortening Logistics time to Europe reduces costs. At the same time, the acceleration of the pace of China's construction of the free trade zone is also good news. At present, China's free trade zones cover countries and regions that account for about 15% of the total value of exports. Negotiations with countries such as Japan and South Korea are underway. As a representative of newly industrialized countries, South Korea has provided lessons learned. The establishment of Korea's free trade zone has created important conditions for the global expansion of home appliance manufacturing. At present, South Korea has become or is in the process of negotiating the number of free trade zones is 15, involved 57 countries and regions. In addition, the inclusion of the RMB in the SDR has accelerated the internationalization process and is equally good for China’s home appliance export business. The entry of RMB into the SDR mark The international community's recognition of RMB internationalization is an important milestone in the integration of China's economy into the global financial system. When cross-border trade and investment settlement, it will help reduce exchange rate risks and exchange costs, and it will also help China's household electrical appliance companies. Expand overseas.

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