China’s "Cool Economy" Heating Up Global Markets
Export Growth in Household Appliances
- Export value of refrigerators up 25.1% to 47.85 billion yuan in the first eight months of 2024
- Electric fans up 22.5% to 37.01 billion yuan
- Air-conditioners up 19.6% to 48.62 billion yuan
- Overall growth in export of household appliances up 17.2% to 473.6 billion yuan
Defining the "Cool Economy"
- Products aimed at helping people cope with hot summers
- Includes sun-protective clothing and trips to cooler regions
- State media also mentions ice cream, cold drinks, and paper fans
Domestic Demand Challenges
- Chinese relying heavily on exports due to soft domestic demand
- Retail sales grew 2.1% in August, missing expectations
- Central bank cuts rates to boost consumption and investment
Expanding Beyond China
- Chinese firms look to international markets for growth
- Soft domestic demand leads to price wars locally
- Air-conditioner maker Gree Electric sees export growth and increased net profit
- Haier reports sales revenue spike in Europe and South-east Asia
Opportunities in South-east Asia
- Tropical climate and mature e-commerce channels make South-east Asia attractive
- South America and Africa also areas of opportunities
- Asean is China’s largest trading partner with bilateral trade reaching US$911.7 billion in 2023
Analysis
China’s "Cool Economy" is not just a reflection of soaring summer temperatures, but a strategic move by Chinese home appliance makers to capitalize on global markets amid soft domestic demand. By expanding beyond China’s borders, these firms are finding growth opportunities in regions like South-east Asia, South America, and Africa. The export growth in household appliances, particularly refrigerators, electric fans, and air-conditioners, showcases the resilience and adaptability of Chinese companies in the face of economic challenges at home.
The shift towards international markets is not only beneficial for Chinese firms but also for countries like South-east Asia, which offer attractive opportunities due to their tropical climate and mature e-commerce channels. As China’s largest trading partner, Asean presents a significant market for Chinese exports, highlighting the importance of global trade partnerships in sustaining economic growth. The central bank’s recent rate cuts further underscore the need for Chinese companies to diversify their markets and focus on international expansion to drive consumption and investment in the global economy.