China's overseas shipments of cooktops, hoods and ovens are on the rise as demand from the Middle East, Asia and the US continues to grow and more suppliers move away from the fiercely competitive domestic market to focus on exports.
From January through June 2006, China makers exported approximately US$801 million worth of cooking appliances, an increase of 27 percent from the same period of the previous year.
The export growth is driven primarily by rising shipments of range hoods. During the first six months of 2006, China suppliers shipped US$43 million worth of hoods, up a dramatic 84 percent from the previous corresponding period.
The following are some of the key trends we see in China's cooktop, hood and oven manufacturing industry:
• Many suppliers will raise prices through 2007 due to escalating raw material costs. Most, however, will limit adjustments within 10 percent to remain competitive.
• In anticipation of increased demand from the major markets, especially for range hoods, most suppliers will expand or upgrade their existing production facilities during the next 12 months. Others, particularly those with sufficient capital, will build additional workshops or move to larger factories.
• Many suppliers aim to increase shipments to alternative markets, including the Middle East and Asia, where standards of quality are not as stringent as those in developed regions such as the EU and the US.
• The most important product trend during the next 12 months will be the release of more energy-efficient appliances. New models will include cooktops that consume less power and ovens that use improved heating elements. Developing easy-to-clean products will also be a key R&D focus for many suppliers.
This report covers cooktops, range hoods and built-in ovens, the three biggest cooking appliance categories manufactured in China.
The Products & Prices section of this report discusses the construction and features of each product as well as other price and quality determinants. Price guides for the main product categories are also included.
The R&D/Design section covers efforts taken by makers to boost the energy efficiency of cooktops and built-in ovens and to reduce the operating noise of range hoods.
The Manufacturing section describes the main steps in cooktop, hood and oven production. The manufacturing capability and equipment of small, midsize and large suppliers is also compared in this section.
The Industry Overview analyzes the country's supplier base, highlighting the key characteristics and manufacturing capability of small, midsize and large makers.
The majority of the estimated 1,000 cooktop, hood and oven suppliers in China are makers that offer mainly low-end and midrange products.
Industry Overview
China's exports of cooktops, hoods and ovens are rising steeply, even as suppliers continue to grapple with increasing production costs and intense price competition.
According to China customs statistics, the country exported nearly 51 million cooking appliances worth US$801 million during the first half of 2006. These numbers represent an increase of 15 percent in volume and 27 percent in value from the same period in 2005.
In particular, range hoods exhibited tremendous growth. Suppliers shipped more than 1 million units worth US$43 million between January and June of 2006, up 84 percent in value and 39 percent in volume from the same six-month period of the previous year.
The volume and value of gas and electric cooking appliance exports, however, dwarf range hood shipments. China makers sent abroad nearly 50 million gas and electric cooking appliances worth US$758 million during the first half of 2006, an increase of 24 percent in value and 15 percent in volume from January through June 2005.
Although cooktops are just one type of cooking appliance among many in the broad product category, they represent the bulk of the country's exports. In this report, cooktops account for more than half of total products exported by featured suppliers.
The higher export value growth rates indicate an increase in the shipments of midrange and high-end models from China. In fact, more makers will continue to move toward upscale production by boosting manufacturing capability.
Makers face rising production costs
Mounting production costs are affecting the bottom lines of nearly all manufacturing industries in China, and cooktop, hood and oven makers are also feeling the heat. From escalating raw material costs to labor shortages, companies are finding it more difficult to turn a profit.
High material costs have hurt cooking appliance suppliers, particularly those exporting to the EU. These companies must follow the RoHS directive and pay for compliant components that typically cost 5 to 10 percent more than noncompliant versions.
The prices of raw materials, especially metals, have risen dramatically since 2004. For instance, steel prices have risen more than 30 percent since 2005. Prices dropped marginally late last year because of oversupply.
The downward trend continued in the first quarter of 2006. But prices have since rebounded and are expected to continue rising in the coming months as demand for the material grows. Increasing production costs in the energy-intensive steel industry are also pushing steel costs up.
Skyrocketing nickel prices also affect steel prices, mainly stainless steel. The most common stainless steel used in cooking appliances are grades 301 and 304, which both contain 6 to 8 percent nickel.
Supplier Profile
Chinabest Home Appliance Co. Ltd
ISO-certified Chinabest specializes in the manufacture of kitchen appliances such as cooktops, range hoods, electric cookers and water heaters.
In 2005, export sales of cooktops and range hoods amounted to US$1.4 million. The company expects overseas revenue to increase by about 55 percent with the addition of several production lines for gas cooktops and water heaters.
OEM orders make up 30 percent of total outbound shipments. The rest are exported under the in-house Best brand. The main overseas markets are the Middle East, Asia, the EU and the US.
Products
Gas cooktops from the company are available in drop-in and tabletop designs. The former can have up to five burners, while the latter can only accommodate up to three.
Tabletop models come in Teflon-coated or 0.4mm-thick stainless steel panels. These feature an electronic ignition system. Prices of two-burner designs range from US$10 to US$16.
Panels of drop-in versions are available in ceramic glass, and stainless or brushed steel. Two-burner designs are about US$30, while four-burner ones are priced at US$60. Those with five burners are about US$80.
Chinabest uses brass or copper burner caps, which are said to increase heat efficiency by up to 50 percent.
The company's range hoods are usually in Teflon-coated steel. Some models may have stainless steel chambers and tempered-glass shelters. These feature metal and charcoal filters, and low-noise motors. Prices range from US$40 to US$70.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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