Haier Appliances Bullish on India Market Despite Demand Slowdown

India's third largest appliances maker Haier Appliances Pvt. is optimistic about the Indian market despite the ongoing slowdown in demand. 

The company, which has been operating in the country for two decades, believes that the long-term growth potential outweighs any short-term challenges. Backed by increased investments in manufacturing and product portfolio expansion, Haier's India head expects to topple LG to become the second-largest player, after Samsung, in the next five years.

"While there has been a slight dip in demand recently in some pockets, the overall market trend is positive," Haier Appliances India President NS Satish told NDTV Profit. With rising disposable income and consumers willing to spend money for comfort and convenience, the demand for high-quality home appliances is expected to jump in the coming years, he said.

Satish warned that the dry weather due to El-Nino continues to impact sales of cooling appliances in northern parts of the country. "The southern region, however, is doing extremely well for us, enabling us to clock 30% growth in the first two months over the previous year. We expect the north markets to pick up from June onwards as the effect of El Nino fades."

Another challenge, he said, was that entry-level consumers are opting to save rather than make big-ticket purchases of items like appliances and electronics. This has put a strain on the industry.

The Rs 1.15 lakh crore consumer durable sector is grappling with excess stock, forcing many companies to slash prices and offer heavy discounts in a bid to attract buyers.

But Haier Appliances, according to Satish, effectively balanced supply and demand. "Being a challenger brand, we were able to beat the market by 2x in 2023 and fortunately, we aren't holding onto any unsold inventory."

Haier is hopeful of a potential improvement in consumer confidence and subsequently, an increase in spending, once the elections are over.

The company is preparing to capitalise on the opportunity and is gearing up with new products to attract consumers back into the market. It is also ramping up production capacity and marketing efforts to cater to the demand. The consumer durable major has invested about Rs 3,000 crore so far in the country. The phase two expansion of its Greater Noida plant is complete and commercial production will begin by November, said Satish.

The company has one more manufacturing facility in Pune. Together, it currently has a capacity to produce nine million units in a year.

With increased capacity, Haier Appliances expects to serve both local and overseas demand. "Our current share of exports is 5%, but we expect to take it to double-digits," said Satish. The company caters to Nepal, Sri Lanka, Bangladesh, New Zealand, Australia, Africa and the Middle East.

Haier has been growing at 25% CAGR for the past six years and is on track to hit the Rs 10,000 crore revenue mark by 2025. In 2023, Haier Appliances reported a revenue of Rs 7,000 crore and it expects to close the current year with a topline of Rs 8,500 crore. The company, part of the Chinese multinational Haier Group Corp., follows calendar-year financial reporting.

One of the key factors contributing to Haier's success in India is its focus on innovation. "We have been actively investing in research and development to introduce innovative and technologically advanced appliances tailored to the needs of Indian consumers," said Satish.

Haier has also placed a strong emphasis on after-sales service to ensure a seamless customer experience, according to Satish.

The company has wide range of home appliances ranging from refrigerators and washing machines to air conditioners and televisions. Recently, it has also ventured into the kitchen appliances space and commercial air-conditioners. In refrigerators, a segment which brings in the most revenue, Haier has a market share of 14-15%, according to Satish. "We are very close to the market leaders in this category, and it will be a major thrust area for us going forward driven by innovation."

But he also sees huge potential in categories such as air-conditioners, washing machines as well as LED TV. "We see a huge headroom to grow in these low-penetrated segments as more first-time buyers enter the market and existing consumers look to upgrade their appliances," said Satish. At present, Haier Appliances' market share in these categories is just 7-8%.