Excessive marketing costs for home appliance companies

In the summer, home appliance companies continue to increase marketing efforts in air conditioners, refrigerators, washing machines, and other electrical appliances. Appliances stores and advertising on various media outlets are overwhelming, and various marketing methods are emerging. According to the survey and statistics of the reporters, last year alone, the sales expenses of 13 listed home appliance companies reached as high as 53.3 billion yuan. Unusually high marketing costs not only caused vicious competition to a certain extent, but also easily induced consumers and invaded part of the interests of investors. It also compressed the profits of manufacturers, making China's home appliance industry, R & D innovation lags behind, over-marketing has become a chronic disease in the current home appliance market.

1 yuan profit is behind 3 yuan sales costs

In 2012, the domestic appliance market was affected by factors such as the slowdown in economic growth, the continuous regulation and control of the real estate market, and the gradual withdrawal of the stimulus policies for the home appliance industry, which led to a significant drop in sales. In this case, the profit growth of home appliance companies is limited, but the expenditure on sales expenses has not decreased but increased.

The survey results of the reporter found that 13 home appliance companies listed on the A-shares had a profit of RMB 18.6 billion in 2012, but in the cost behind this, the total sales cost was as high as RMB 53.3 billion, equivalent to a profit of 1 yuan, which was nearly 3 yuan. With the sales cost supported, this proportion is much higher than real estate, liquor and other consumer industries.

The total operating cost of a listed company generally consists of taxation, sales expenses, management fees, and financial expenses. Sales costs of home appliance companies are generally far higher than other costs. Qingdao Haier, Midea Electric Appliances, Gree Electric Appliances and other large home appliance companies had sales costs of more than 5 billion yuan last year. Many companies’ sales costs reached more than 2 times the administrative expenses. .

An expert from the Center for New Economics and Industry Research at Tsinghua University stated that sales expenses include advertising fees, promotional fees, after-sales service fees, business hospitality expenses, etc., and sales costs for the home appliance industry are generally high. According to the financial data of leading companies such as Vanke and Kweichow Moutai, the reporter found that the sales costs of listed companies in the real estate, liquor, food, and other industries were far less than the administrative expenses.

Qiu Baochang, a legal adviser of the Beijing Consumers Association, believes that home appliance companies are constrained by the intense competition among companies in the industry. On the one hand, they are subject to the electronics stores that have strong channel advantages. Therefore, sales costs are much higher than those of other industries.

The advertising fee is not terribly high

According to a survey conducted by the reporter, among the sales expenses of home appliance companies, the proportion of advertising expenses is not small, and some of the home appliance companies’ advertising costs even exceed the costs of research and development and after-sales services. At the same time, some large home appliance companies obscured sales expenses in their financial statements, leaving huge amounts of money for advertisements.

Similar to other consumer industries, the appliance industry places great emphasis on advertising. The high-tech concept slogan such as “1 night of electricity a night”, “freezer without freezing”, “1 second boot, 10 hours of continuous use of a tablet computer” and “52-day-a-day fans” was sloganed by companies. Such over-marketing has already been Misleading consumers. Owen Consulting's general manager of the white goods business division Han Yu analysis, this publicity and the current fierce competition in the home appliance market is closely linked, home appliance manufacturers like to come up with energy-saving concepts to meet consumer demand for energy-saving emission reduction, which is sought in the price and marketing methods Make a fuss about it in order to compete for market share.

Statistics from the reporters found that Sichuan Changhong, Shenzhen Konka, Little Swan, and Hisense Electric spent more than 100 million yuan in advertising expenses last year. Many home appliance manufacturers' advertising fees approached or even surpassed research and development expenses. Among them, Meiling's advertising fees reached 58.27 million yuan last year, while research and development expenses were only 29.93 million yuan, and Shenzhen Konka advertising fees were as high as 310 million yuan, but R&D expenses were only 200 million yuan.

At the same time, many manufacturers' advertising investment exceeds the cost of after-sales services, causing people to worry about how much sincerity the home appliance manufacturers take in dealing with consumers in the end. Aucma had an advertising fee of 76.15 million yuan, but the after-sales service fee was 39.75 million yuan, and Hisense Electric's advertising fee was as high as 620 million yuan, but the after-sales service fee was only 260 million yuan.

According to the information disclosure habits of most listed companies, the details of advertising fees and other expenses must be specified in the column of sales expenses. However, it is puzzling that many large home appliance companies obscure the sales expenses. Appliances, Qingdao Haier, TCL, and other companies let advertisement fees cover “cats and cats”.

Do not let excessive marketing pit consumers and investors

The home appliance manufacturers try to adopt irrational marketing methods and high sales costs to win market competition, which is closely related to the pattern change of the home appliance market in recent years.

In recent years, prime-time TV commercials have once become the marketing direction that liquor companies compete for. Luo Qingqi, an expert in the home appliance industry and a senior director of Pare Consultancy, believes that compared with the frantic bidding of white wine companies for prime-time TV commercials, some home appliance companies are advancing in this direction.

At present, listed companies have expressed their “favor” for this direction. Hefei Sanyo stated that in 2012, the company continued to promote its brand image by bidding for television golden advertising hours and title-sponsored cultural events. The annual promotion and promotion cost of a certain brand reached 50 million yuan. The "one night's 1 kWh" commercial advertised by Midea Air-Conditioning continued to be broadcast on television at prime time.

Han Hao analysis, if household electrical appliance enterprises in the R & D and new technology are not enough reserves, they will make a fuss about the price and marketing methods, but this should not allow the corresponding reduction in R & D and after-sales service and other expenses.

At the same time, as a major consumer sector in the A-share market, home appliance listed companies should provide investors with more returns. In 2012, all 13 home appliance listed companies had a total dividend of 7.1 billion yuan, but the dividends of Midea's electrical appliances and Gree Electric Appliances together reached 5 billion yuan, and four companies did not pay dividends in the case of profit. In this situation, many investment institutions have chosen to vote with their feet, and many home appliance listed companies’ share prices have continued to fall since the beginning of the year.