Consumption, urbanization help German appliance firm expand

Vorwerk will scale up its Shanghai plant and establish up to 30 customer centers

Vorwerk & Co KG, the German manufacturer for household appliances and cosmetics, will expand its manufacturing base in Shanghai, said one of its senior executives.

It will also set up 25 to 30 customer experience centers across China this year.

Many opportunities come from Chinese consumers' rising incomes and accelerating urbanization in the country.

These factors have been driving demand for more diversified and convenient food and diets, beverage and cleaning products.

Higher incomes have also pushed many consumers to increase their purchases of high-end home appliances such as smart cooking machines, vacuum cleaners and teamakers.

Zha Sheng, Vorwerk's general manager for China, said the company constantly aims to challenge perceptions and find out the limits of technology, to empower people by freeing up their time.

"We believe that seeing things differently means sensing life differently, and we hope our customers can make the most of their time and enjoy it at its best with our latest product series," he said.

The Wuppertal-headquartered company currently is planning to expand its manufacturing facility in Shanghai's Qingpu district and enhance its logistics network, as the Yangtze River Delta region has a sound industrial system, attractive market base and mature support systems.

Zha said a significant amount of Vorwerk's global research and development resources, and capital expenditure will be focused on China as the nation has an integral role to play in the company's overall growth plans.

The country's ongoing consumption upgrade, rising incomes and the younger generation's strong purchasing power will continue to attract global companies to invest in product-and services-related businesses in China in the long run.

Currently, Kobold (household cleaning products), Thermomix (smart cooking machines) and Temial (tea-makers) are Vorwerk's key products to be sold in China, where its main markets are top-and second-tier cities.

"In comparison with consumers in other markets, we found that Chinese customers are incredibly inquisitive and hungry for information. They want to embrace new technologies and are fairly open to disruptive products," he said, stressing that with the rapid development of intelligent technology, the smart home has become an industry trend.

"As we grow in China, we must invest our ability to localize apps and software, bringing technology online quicker than ever before," he said. "As a country, China is right at the forefront of an intelligent machine revolution, so we will be seeking its brightest minds to join us in shaping Vorwerk's mechanical, electronic and digital technology for the future."

Supported by over 12,000 employees globally, Vorwerk generated consolidated sales of 2.9 billion euros ($3.26 billion) in 2017 and operates in more than 70 countries and regions. It runs a plant and an R&D center in China.

Anchored in Shanghai, the company's China unit also manufactures appliances, and ships industrial parts from its Shanghai factory to its global networks, including economies related to the Belt and Road Initiative.

The home appliances market in China has already been reshaped by e-commerce, with shoppers spending 810.4 billion yuan ($120.36 billion) on goods in this category in 2018, up 1.9 percent year-on-year, according to a report released by Beijing-based China Household Electric Appliance Research Institute in February.

Meanwhile, China's kitchen appliance sales outshone other segments in the household appliance market, which appeared gloomy in the past year as the real estate market has been reined in and prices of raw materials soared.

The report cited that in the breakdown, high-end kitchen products lead the trend, suggesting that the country's consumption upgrade is fairly obvious.

Along with that, more companies from both home and global markets in this field have been turning their eyes toward high-end and smart products in recent years, resulting in unit prices that keep rising, said Sun Fuquan, a researcher at the Beijing-based Chinese Academy of Science and Technology for Development.

Even though the prices of foreign brands are higher than those of domestic ones, well-known Western brands command loyal fans in China. The trend is boosted by China's huge consumer base, a fast-growing e-commerce business, fast 4G networks and the expected launch of 5G networks sooner or later.