While home appliance companies are looking for growth in corporate performance and capital is flowing out, BYD, a car rookie, has high-profile announcement that it will enter the home appliance industry.

BYD is purely looking at the prospects of the home appliance industry to have a good share, or borrowed to stay in the interests of other interests? BYD in the end to see what potential power of the household appliance industry?

What is the intention of entering home appliances?

In the middle of the year, BYD has four rumors about the home appliance industry: BYD has already set up an electrical appliance department and intends to enter the home appliance industry and will launch the first new product in the second half of the year. Later, it was confirmed by news that BYD Electric Co. settled in Baolong Industrial Zone, Longgang District, Shenzhen, and it was a foregone conclusion to enter the home appliance industry. By then, BYD would have four industrial clusters of IT, automobiles, new energy and household appliances. In fact, BYD has not yet officially announced what kind of home appliances to produce first.

Today, once again, news of BYD's entry into the field of home appliances has been reported, and market evaluations have been mixed. As for the specific progress, BYD has a tight-knit tone and is not willing to disclose too much.

Some market analysis believes that since BYD has been doing computer OEMs, it is not difficult to get involved in home appliance manufacturing, and it will certainly achieve breakthroughs from highly connected businesses, which may be LED large-screen TVs. There are also points of view that BYD may take the lead in selecting products such as LCD TVs or automotive-related car electronics for entry into home appliances.

Industry stakeholders pointed out that BYD's entry into other fields is not uncommon, but the effect is not satisfactory. Currently more than 90% of BYD’s revenue comes from the automotive industry, while the IT industry group contributes less than 10% to the company’s revenue. After more than ten years of development, BYD started its mobile phone battery and related industry market, but it has not reached the ideal level of revenue.

If BYD engages in the business of household appliances, it will face great challenges and risks. Now that the home appliance industry is quite mature, there are several major oligopolistic competitions and it is easier to squeeze in. BYD will enter a completely unfamiliar field and the challenges it faces are undoubtedly enormous.

Crush into home appliances is not optimistic

At present, the home appliance industry has already entered the era of low-profit competition.

Liu Buchen, a veteran home appliance observer, believes: “The market opportunities for the consumer electronics market are small. The household appliance industry is a very mature industry. The opportunity for entry is relatively small. The home appliance market is relatively stable. Taking air conditioners as an example, Gree, Midea, and Haier’s three brands dominate the market. It is difficult for old brands to return to the market, and of course it is even more difficult for new brands.Color TV, Chinese market Hisense, Skyworth, TCL, Konka and other market shares are high; refrigerators, Kelon, Meiling, Xinfei and other competition are fierce, new brands continue These all mean that the market structure has been perfected, and the opportunity market and market gap are quite small. Best Buy enters China as a home appliance chain and is not optimistic about it. Chinese home appliances are already quite strong in the market, and latecomers will face great difficulties."

Industry insiders also pointed out that household appliances themselves are relatively low-margin industries, and their investment returns are relatively small. In addition to Gree and Midea, home appliance companies are not ideal.

According to the 2010 semiannual report of Sichuan Changhong, during the reporting period, the total operating revenue was 18.16195 billion yuan, a year-on-year increase of 40.18%. However, the total profit realized was only 2.3445 billion yuan, and the net profit was 1.6658 trillion yuan, of which the net profit attributable to the shareholders of the listed company was 4063.00. Ten thousand yuan.

"Perhaps BYD itself is too confident that the model of car success can not be duplicated again. China's current car is equivalent to the home appliance industry a decade ago, is in a period of rapid consumption, the market is rapidly expanding.

BYD is a low-end car brand, and the brand's driving force for other products is weak. "A senior person in the industry pointed out.

"Technology, channel, and brand are issues that BYD faces. If there is still an opportunity to start from the field of special home appliances, that is, automotive appliances, if that is the case, they can digest a part of themselves." Liu Buchen thinks.

"After China's enterprises have reached a certain scale, it is easy to make mistakes by diversification." Liu Buchen pointed out at the same time.

But in terms of the home appliance industry, the market itself is not optimistic. If BYD to develop a new market area is still difficult.

In the first few months of this year, major household appliances such as refrigerators, air conditioners, washing machines, and color TVs have shown rapid growth, both domestically and exportably. However, industry experts have expressed their views: "China's home appliance market, consumer demand will decline in the second half will be about 8%," "the second half of the growth rate of home appliance exports will slow down significantly compared to the first half" and so on, seemingly smooth home appliance consumer market, the future of home appliances Exports still face a relatively complicated economic situation and many uncertainties.

Luo Qingqi, a senior director of Pare Consultancy Co., Ltd., believes that with what kind of model, financial support for strength and quality of resources have become the key to BYD’s success in household appliances.

TV business opportunities or its breakthrough

Industry insiders analyzed that BYD has been producing automotive displays and computer OEMs, and has advantages in core air-conditioner production areas such as compressors, and TV may well be a breakthrough for BYD.

Prior to this, BYD did electric vehicles and combined electronics and automobiles. Electronics were in the sunset period and cars were in a period of rising sun. The outbreak of the auto industry led to an increase in sales of products.

If this model is replicated, in the automotive industry, BYD is the first company that combines home appliances and automobiles.

Luo Qingqi pointed out: "BYD entered the field of home appliances may start from the TV set. The future of the TV will show a new form, the real competition of television, the next generation has not yet begun, is still gestating."

At present, BYD's business has been involved in batteries, liquid crystal display modules and mobile phones. BYD has also done mobile phone OEM for famous international brands such as Samsung and Nokia, and has already begun to build Netbook. Earlier senior BYD had said that it will launch tablet computers next year, and is negotiating with a number of mainland personal computer manufacturers.

With the opening and infiltration of triple play, Internet TV is hot again. After the triple play, consumers can achieve services such as communication, television, and Internet access simply by pulling a line or wireless access. In response to this trend, television companies took the lead in responding. The unexpected market digestibility of new product 3D TVs has also injected a strong boost to the major players in R&D. Future television is highly expected.

Luo Qingqi believes that next-generation TVs are expected to be launched within 3-5 years. Currently, mobile phones and computers are all being integrated, and products have evolved into computers, televisions, and mobile phones. The future of television is not isolated. BYD may start from the perspective of future TV opportunities and sit down for the next generation of TV OEMs. The future of Internet TV, software is more and more important, large-scale OEM will show a very powerful power.

Earlier there was media coverage that an insider of a newly established BYD company disclosed that BYD is engaged in the operation of television products.

The report also mentions BYD’s insiders saying that “Our goal in life is to work in BYD, drive a BYD car, use a BYD computer...”.

BYD’s ambition can be seen. Perhaps in the future we can see that BYD brand's various products are filled with daily life. The BYD, who has done a good job in the auto industry, can still go smoothly in the field of home appliances. We will wait and see.