Cross-border e-commerce reshapes the domestic small appliance industry

The development of cross-border e-commerce is reshaping the domestic small home appliance industry. It has brought new opportunities and challenges to the domestic small home appliance industry and also provided a broader stage for its overseas dream. Recommended for Internet friends to read.

The rules of the game for small household appliances going overseas for 30 years have been rewritten by cross-border e-commerce in just two years.

One day in July, a batch of small household appliances from the Shunde Industrial Belt in Foshan, 45 kilometers away, arrived at the warehouse of Guangzhou Ladoga Freight Forwarding Company.

After the goods were inspected, the salesmen needed to pack and load them again. The small trucks that were commonly used in the past could not accommodate this batch of goods, so the transportation task was assigned to medium-sized trucks with double the capacity.

On the same day, KK, who was working in this freight forwarding company, posted a social update: Congratulations on the boom in orders for small household appliances exported to Russia!

In another 13-25 days, this batch of small household appliances will pass through Xinjiang, first arriving in the Russian capital Moscow, and then after a second transfer to its destination Kazan.

KK told Hedgehog Commune that since 2022, overseas customers' purchasing demand for domestic small household appliances has gradually increased, and this year there has been a continuous increase in orders.

From the overall industry background, the global small household appliance market has been on an upward trend.

According to Statista data forecasts, the global small household appliance market will reach US$254.3 billion in 2024, and will maintain a compound annual growth rate of 4.65% in the next four years.

Delving deeper into this easily overlooked trillion-dollar market, a surprising discovery is that China has long become the world's largest manufacturer of home appliances, with its output accounting for 60%-70% of the global home appliance productivity.

Over the past few decades, four major domestic small household appliance industry belts have been formed from south to north in Shunde, Guangdong, Cixi, Zhejiang, Hefei, Anhui, and Qingdao, Shandong, and they have relied on their respective advantages to export their goods overseas.

In recent years, with the expansion and development of cross-border e-commerce channels, domestic small household appliances are undergoing a transformation from "white label to brand".

1. When domestic small household appliances become a hit

In a TikTok video, a foreign food blogger is making ice cream.

He poured the ingredients into the cup, installed the cup and clicked "start", and soon the powder in the cup turned into delicious ice cream. The food blogger praised the newly purchased "ice cream machine" with a slightly exaggerated tone and expression, and gave the camera a close-up of the home appliance, revealing the brand logo on the top of the machine, which read "Ninja".

If you click on the #Ninjacreami TikTok topic by following the video tag, you will find that there are more than 40,000 videos under this topic, most of which are posted by ordinary users, not official promotional videos of the brand. Obviously, this ice cream machine is very popular among overseas users.

For domestic consumers, the name Ninja may not be familiar, but most people should have heard of its sister brand Joyoung under the same parent company.

Ninja and Joyoung both belong to China's JS Global Lifestyle Group. They were acquired by JS Global Lifestyle in 2019 and focus on the small home appliance market in Europe and the United States. It is understood that Ninja's ice cream machine currently has a stable monthly sales of over 10,000 on Amazon, making it one of the truly popular small home appliance products overseas.

There are many popular small appliances like Ninja that have "hidden their fame and merit".

Domestic small appliances may have really "occupied" foreigners' kitchens. On the #kitchenappliances topic page on TikTok, if you click on any video, there is a high probability that you will find small appliances from China.

In a short video sharing a food menu, when the blogger takes out the crispy and golden fried chicken legs or potatoes from the air fryer, if the air fryer is marked with the brand name "Cosori", then you can confidently say that he is using an air fryer made in China.

Cosori is backed by a domestic company called Vesync (Chenbei Technology), a cross-border brand focusing on small kitchen appliances founded in 2016. Vesync started out as a cross-border business on Amazon, and after more than a decade of development, it has launched three of its own brands: Etekcity, Levoit, and Cosori.

In the past two years, as overseas users have shown increasing enthusiasm for air fryers, Cosori's air fryers have become increasingly popular overseas.

According to the "BrandOS Overseas Brand Social Media Influence List" released by OneSight, Cosori even ranked first in the US market share in the first quarter of 2024.

In addition to small appliances that look more "serious" such as ice cream makers and air fryers, overseas e-commerce and social platforms are also full of "novel and unique" small appliances such as dumpling makers and egg cookers.

A foreign netizen recommended his egg cooker on a review website: "One day I bought a box of eggs for $7. The soaring price of eggs prompted me to treat them with the highest respect. So I bought an egg cooker, which can cook eggs in N different ways - boiled, steamed, fried, and even used to make omelets..."

Among the many pictures or videos about egg boilers, if you see an egg boiler with bright colors, cute appearance, and "Bear" cartoon font printed on it, then you can confidently say: this egg boiler is also made in China.

Behind "Bear" is the domestic company Bear Electric Appliances. This small home appliance brand was founded 18 years ago in Foshan, Guangdong. After it was listed on the Shenzhen Stock Exchange in 2019, it was hailed as the "No. 1 domestic small home appliance stock" and has also been doing well in overseas markets in recent years.

According to financial report information, Bear Electric Appliances' operating income in 2023 was approximately 4.712 billion yuan, a year-on-year increase of 14.43%, of which overseas revenue reached 370 million yuan, a year-on-year increase of 105.66%.

Image source: Bear Electric

Yu Xuehui, a native of Cixi, Zhejiang, is known as "Brother Hui" in the industry. He is a foreign trade veteran who has been engaged in the home appliance business for more than 20 years.

Facing the frequent appearance of hot-selling domestic small appliances on foreign platforms this year, he is much calmer than us: "This year's so-called hot-selling domestic small appliances are more due to the emergence of TikTok and Temu. These platforms are more likely to have hot-selling products than the previous single Amazon channel."

When we shift our focus away from specific hit products and focus on the overall background of the cross-border industry, a change that has occurred simultaneously with the frequent hits of domestic small household appliances is that TikTok, Temu, AliExpress, and SHEIN have grown rapidly overseas, and the channels for cross-border sales have been broadened.

For manufacturers, multiple platforms and multiple sales channels increase product exposure. E-commerce models like TikTok, which combine products with content, are more likely to produce popular products with wide dissemination and great influence. For example, the Ninja ice cream machine mentioned above has more than 2 million likes on the most played video on TikTok, and the videos of the air fryer Cosori have more than hundreds of thousands of views on TikTok.

Therefore, it is not surprising that domestic small household appliances can now occupy a place overseas.

"Whether it is traffic or operation, China's manufacturing currently has a great advantage in promoting through its own platforms and channels."

Yu Xuehui explained to us: "From Pinduoduo to Temu, from Douyin e-commerce to TikTok Shop, the mature strategies of domestic platforms have been moved overseas and have formed a certain impact; if combined with the complete supply chain in Cixi, Shunde and other places in China, the competitiveness of domestic small household appliances will be further strengthened."

2. Evolution and reshuffle of the small household appliance industry belt

Shunde and Cixi mentioned by Brother Hui are the two earliest developed small home appliance industry belts in China.

Shunde, the "Chinese Capital of Small Household Appliances", is located in Foshan City, Guangdong Province, close to the provincial capital Guangzhou. It began producing household appliances such as fans in the 1970s. In the 1980s, with the efforts of local workers, it produced the country's first double-door refrigerator. In the 1990s, local small household appliances gradually expanded from electric fans to refrigerators, air conditioners, microwave ovens, rice cookers and more categories.

After more than 50 years of development, Shunde has become the country's largest and most comprehensive home appliance manufacturing base, with revenue exceeding 40% of the country's home appliance industry. Well-known leading home appliance brands such as Midea, Hisense, and Galanz were all born in Shunde.

Cixi, another "hometown of small household appliances in China", is located in the eastern part of Zhejiang Province, close to Shanghai. Yu Xuehui told us: "Cixi small household appliances began in the early 1990s, initially providing supporting equipment for household appliance factories in Shanghai and Jiangsu. At the beginning, there were no technical engineers, so we could only transfer 'Sunday engineers' from Shanghai to guide production. Later, we gradually transformed from making parts to producing complete machines."

Today, Cixi has a complete supply chain. There are more than 2,000 home appliance manufacturers in the city and more than 8,000 home appliance supporting companies nearby, forming a powerful industrial cluster effect.

As for the overseas expansion of domestic small household appliances, it can be traced back to the mid-1990s. With the liberalization of foreign trade policies, small household appliance companies at that time tried their hand at foreign trade business, and domestic small household appliances have since gone abroad.

In 1995, when the family's electric heater factory started to do foreign trade, Yu Xuehui was still in college: "Initially, we took orders from foreign trade companies in Guangdong and other places in China. Later, local factories in Cixi also started to do foreign trade business themselves, and the domestic small home appliance industry entered a period of rapid development."

For a long time after that, the export of domestic small household appliances was carried out in the OEM mode. This is a B2B business. Xinbao Electric and Boling Electric in Shunde and Cixi were originally OEM factories for internationally renowned brands. The products they produced would have "made in China" printed in the corner, but the names of overseas brands such as Philips, Dyson, Panasonic, and Siemens printed in prominent places.

It was not until after the millennium that the development of e-commerce brought about two important changes in the small household appliance industry.

The first time was around 2000, when the emergence of online B2B platforms such as Alibaba International Station helped small home appliance manufacturers to win overseas orders through the Internet.

Yu Xuehui still remembers that when his factory first joined Alibaba, it could only dial up to the Internet, and the Internet fee was calculated by the minute. After quickly publishing product information and replying to customer messages, it was necessary to log off immediately. "At that time, Alibaba hit the big trend of e-commerce, and we were lucky. We immediately received an order of more than 1 million yuan from a foreign trade company."

The second time was around 2012, when Amazon officially opened to Chinese sellers. The opening of cross-border platform channels gave many small appliance manufacturers the opportunity to try overseas ToC business.

Vesync (Morning North Technology) mentioned in the previous article is a typical case. In 2012, Yang Lin, who once operated an Amazon online store in the United States, returned to Shenzhen, China and founded Morning North Technology. As the company had accumulated a lot of experience in Amazon store operations and was rooted in the small home appliance industry belt in the Pearl River Delta, Vesync took off with the east wind of Amazon's cross-border craze, and became the creator of today's small home appliance hits.

Now another 10 years have passed, and Shunde's small home appliance companies have long entered the fast lane of cross-border e-commerce, but Cixi is a little "outdated".

"Even now, small home appliance companies in Cixi still choose to engage in traditional B-end business." After years of immersion in the small home appliance industry, Yu Xuehui believes that Cixi's transformation is slow. On the one hand, it is a problem of inertia. Everyone wants to make money in their comfort zone. On the other hand, there are indeed many difficulties in switching from B-end to C-end.

For example, traditional B-end orders are all large orders, but doing business on the C-end requires first testing a small number of items and then quickly filling orders; for another example, in the past, customers would specify which products they wanted, but for the C-end, manufacturers have to select the products themselves and solve logistics problems themselves.

In the past two years, after online channels became mainstream, the overall situation of the domestic small home appliance industry has also changed significantly.

In addition to Shunde and Cixi, the small home appliance industry in Qingdao, Shandong and Hefei, Anhui is growing rapidly. According to statistics from the Southern Finance Think Tank, by the end of March 2024, the number of small home appliance manufacturing companies in Qingdao and Hefei was 1,569 and 1,450 respectively, exceeding the 756 and 656 in Shunde and Cixi.

This is not unrelated to the promotion of local governments. In 2022, Qingdao issued the "Three-Year Action Plan for the Smart Home Appliance Industry Chain", and in 2023, Anhui launched the "Anhui Province Small Home Appliances "One Chain, One Policy" Implementation Plan", and will even build a live broadcast base for smart small home appliances for the popular live broadcast sales.

Overseas, the government and cross-border platforms are also making efforts: "Last year, TikTok and Temu successively opened up small household appliance categories, and many companies and factories settled in the platforms. The government is also encouraging companies to go global," said Yu Xuehui.

It is foreseeable that with the increase in cross-border e-commerce platforms, domestic small household appliances are undergoing another round of reshaping and upgrading, and this may be the third opportunity for manufacturers in the industrial belt.

3. Domestic small appliances also have big dreams

After going through the OEM model of simple OEM and then the ODM model where manufacturers participate in product design and development, "branding" is the common expectation of domestic small household appliance manufacturers for the future of the industry.

2018 was an important turning point. Amazon, the dominant cross-border platform at the time, banned a large number of Chinese sellers with serious homogeneity. According to reports at the time, more than 50,000 Chinese sellers were banned, and the industry lost more than 100 billion yuan.

Under the heavy blow, more and more cross-border manufacturers finally realized that the traditional mass distribution model can no longer meet the needs of the times, and only by doing high-quality innovation and research and development can they survive steadily overseas.

Also in 2018, the competition in China's cleaning appliance market became increasingly fierce, but looking overseas, the market prospects of smart cleaning products are still broad, so Dreame was determined to take the lead in cultivating its brand in overseas markets. From initially doing OEM for Xiaomi to gradually reducing the proportion of OEM revenue and building its own brand, Dreame is a typical representative of the continuous iteration and evolution of domestic smart technology brands of home appliances.

Whether in the domestic or overseas markets, product strength always comes first.

According to the person in charge of the relevant business of Dreame, "In any open and competitive market, global consumers have surprisingly consistent judgments and demands on products, and everyone attaches great importance to technical capabilities."

In the early days, there was a rumor in the industry that Chaimi’s internal requirements were “R&D should be three times that of its peers, with one-third invested in product iteration in existing fields, one-third invested in product innovation in existing fields, and one-third invested in innovation in new fields.”

With the expansion of overseas business, Dreame has adjusted its product functions according to the differentiated demands of users in different regions. For example, families in Europe, North America, the Middle East and other regions generally lay large carpets, so Dreame customized the "rag removal" function. After the sweeping robot recognizes the carpet, it will automatically return to the base station to remove the rag before cleaning the carpet.

At the same time, the emergence of cross-border platforms such as TikTok and Temu has objectively given domestic small appliance manufacturers the opportunity to focus on segmented categories and develop innovative categories.

Traditional foreign trade with European and American supermarket customers is limited by the shelf space offline. The number of shelves for each product in the supermarket is very fixed, and the amount of goods imported is also fixed. Therefore, in the past, manufacturers rarely tried to develop new products. However, under the operating logic of cross-border platforms, as long as the product details page has pictures and videos, it has the opportunity to attract the attention of C-end consumers.

"Novel and unique" products can also have a place. "For products like electric toothbrush, electric cleaning brush, egg roll comb, etc., in the past, I didn't know what keywords to search for in traditional channels, but now TikTok can directly show the selling points to consumers through a short video." Yu Xuehui said.

More and more domestic brands have begun to realize the importance of using overseas social media to reach local consumers and build trust with them.

Vesync's two major brands, Osori and Levoit, have opened TikTok accounts to conduct content operations; Bear Electric Appliances has opened TikTok accounts in the Philippines, Malaysia and other markets and conducts official live streaming to sell products; Dreame has not only opened official accounts of "Dreami Technology" on Facebook, YouTube, TikTok and Instagram, but also produces differentiated content in local languages ​​for accounts in different countries and regions, and releases new products that meet local needs and are aimed at local markets.

Dreame Technology told us that brands will have different focuses when conducting overseas marketing based on the characteristics of different platforms: "Facebook is mainly for community maintenance and direct communication with consumers; YouTube long videos are mainly for professional product evaluation and comparison, fully demonstrating the technical strength of the product; Instagram focuses on influencers to promote and convey lifestyles and concepts; TikTok is mainly based on live broadcasting, and pays more attention to the interactivity, activity and creative expression of the live broadcast room."

At the end of last year, overseas media MarketplacePulse released the "2023 US E-commerce Market Annual Review" and divided the overseas expansion of Chinese products into three stages.

Among them, the first stage is "made in China", and overseas consumers do not care where these products are produced; the second stage is "sold by China", and Chinese merchants sell through overseas cross-border platforms; the third stage is today's "marketed by China". The emergence of Shein, Temu, and TikTok Shop has allowed Chinese brands to enter the vision of overseas consumers in all aspects.

Image source: MarketplacePulse

All of this is inseparable from the fact that manufacturers in many industrial belts in China are always striving to evolve and move forward.

Recently, Yu Xuehui has set his sights on the forward placement of stock warehouses and started overseas small B wholesale business (that is, supplying goods to smaller B-end customers such as overseas stores and cross-border sellers).

He and his team have stocked more than 20 small appliances in overseas warehouses: "At present, we are mainly in the United States, and will gradually plan markets such as Europe, Japan, Central Asia, Russia, and Southeast Asia. Although the distribution business just started in May, it is growing very fast and the trend is positive."

Although domestic small household appliances are small, they can support the great dream of domestic brands going overseas.

Text｜Ah You‍‍‍‍‍‍Editor｜Chen Meixi This article is by the author of Operation Party [Hedgehog Commune], WeChat public account: [Hedgehog Commune], original/authorized to be published on Operation Party, and any reproduction without permission is prohibited.

The title image is from Unsplash, based on the CC0 protocol.