Fight for value warfare air conditioning oligopoly formation

In 2000, there were about 400 air-conditioning brands in China. In 2012, consumers bought less than 10 air-conditioning brands. As of 2011, the three major air-conditioning giants of the United States, Gree, and Haier have firmly controlled more than 70% of the domestic market. After a big wave of scouring, the oligopolistic competition in the air-conditioning industry has formed.

There is such an intriguing data: In 2000, about 400 air-conditioner brands in China fell from about 140 in 2003; in 2004, there were only about 50 active brands in the market. In 2007, the degree of brand concentration was further increased, and it showed a trend of tilting to the top brands; in 2012, consumers bought less than 10 air-conditioning brands. Behind this data, not only reflects the fierce competition in the air-conditioning, but also shows that after a big wave of sand, the air conditioning industry's oligopolistic competition has formed.

Opened the price war to eliminate 95% of the brand in 10 years

Since the air conditioner entered the Chinese market in the 1990s, it has been in the pattern of princely disputes and brand melee. At that time, as air conditioning entered the market, huge consumer potential, coupled with low barriers to entry, many companies in pursuit of short-term profits, swept the air conditioning line, the peak period of domestic air-conditioning brand reached more than 400, leading to a serious excess air conditioning output. In 2003, air-conditioning once reached an inventory of 30 million units, but the market demand for that year was 20 million units, a total of more than 10 million units. Based on factors such as seizing the market and digesting high inventory, the air-conditioning industry has started a continuous price war since 2000. From this time on, air-conditioning brands have embarked on the elimination of “fast fish and slow fish”. .

The constant price war over the years has caused all air-conditioning manufacturers to suffer a greater impact. The price war has enabled consumers to enjoy low-cost benefits, and has also caused the fate of various manufacturers to change frequently. The real significance of the industry restructuring has been particularly prominent in 2003. In those years, mainstream manufacturers represented by Gree and Midea further established the leading position in the industry by virtue of their comprehensive advantages in terms of scale and quality.

In contrast, many of the "38 factories" (started in March, discontinued in August), and the air-conditioned living space of the brand-name air conditioners are getting smaller and smaller, and are gradually disappearing from the eyes of consumers. On the one hand, these products lack core competitiveness and their brand appeal is not strong, and marketing investment cannot be compared with the giants at all. They have to rely on low-price strategies to “sneak attack”; on the other hand, the front-line mainstream manufacturers are not afraid of price war, but rely on With strong production scale and financial backing, it took the initiative in the price war and exerted strong pressure on the second and third line brands. Under these circumstances, many brands of air conditioners familiar to people in the past have lost their lives, and their market share has shrunk and shrank, and some of them have even quitted.

The price war has accelerated the industry's reshuffle, leaving only 29 brands for the frozen domestic market in 2009. In just 10 years, the market eliminated nearly 95% of the brands; the price war also made air-conditioning consumption more concentrated. In 2006, the top 10 air-conditioning brands accounted for 85% of the sales, and the air-conditioning oligopoly had begun to emerge.

Fight for value warfare air conditioning oligopoly formation

The price war is a double-edged sword. Although it has advanced the reshuffle process in the air-conditioning industry, it has also become a stumbling block to the air-conditioning brand. Therefore, in 2008, the air-conditioning industry reverted to rational competition, from price war to value war, focusing on brand competition and technological competition.

In this baptism, the air-conditioning market competition is more manifested in the comprehensive competition of the company's strength, which makes the original leadership air-conditioning brand's advantages in terms of technology, brand, scale, cost, etc. easier to maintain; In addition to these advantages, Gree Leading companies such as Midea and Midea have also significantly reduced costs through the integration of upstream and downstream industries, which is also a major factor in stimulating the increase in brand concentration in the air-conditioning industry. In particular, it is worth mentioning that in the process of value warfare, a strong brand pays attention to the adjustment of product structure and takes full advantage of the upgrading of product technology. Regardless of Gree or Midea, they all attacked the inverter air conditioner and accelerated the promotion of the inverter air conditioner. The increase in the ratio of the inverter air conditioner market brought about a boost to the company’s revenue scale and profit. The two brands also successfully managed to get rid of the traditional fixed frequency. The scale of air conditioner sales dominates the market.

In addition, the country's successive launch of home appliances to the countryside, trade-in, energy-saving benefits and other benefits of the people policy, also contributed to the development of air conditioning mainstream brands. Under the stimulation of the Matthew effect, the big brands were strong and the second and third line brands gradually faded out of the market and even disappeared. As of 2011, the three major air-conditioning giants of the United States, Gree, and Haier have firmly controlled more than 70% of the domestic market, forming a pattern of oligopoly.