European Economics Thread
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Chinese firms expand in Europe as orders for China-made heating products keep surging
Europe faces a rising gap in fuel supplies in coming winter
By GT staff reporters Published: Oct 13, 2022 09:43 PM
A staffer prepares heating equipment at Yiwu International Trade City in East China's Zhejiang Province, on October 13, 2022. Photo: VCG
Chinese companies are ramping up production capacity in Europe, as local customers' demand for Chinese heating products ranging from electric carpets and heat pumps to heaters and hot-water bags have surged. Europe faces a rising gap in fuel supplies that could make the coming winter intolerably cold for many households.
Electrical appliance manufacturing giant Midea Group plans to hold a groundbreaking ceremony for a heat pump base in Italy on Friday.
With an investment of 60 million euros ($58.3 million), the base will open in the second quarter of 2024. The base will have production lines, support facilities and a research and development center, according to Midea.
Some Chinese companies are also offering products tailored for the European market. Chinese fan-maker Jisu Technology, for example, recently launched an energy-saving fan for the European market, the Hangzhou Daily reported.
European firms have been actively sourcing warming equipment from Chinese sellers in recent months to help get through the winter, as the region faces tight energy supplies after relations with Russia soured. Russia used to be Europe's biggest supplier of natural gas.
According to a Reuters report recently, Europe needs to "pray for a mild winter" and reduce energy demand as deeper cuts to Russian fuel supply and other incidents could "make power rationing or blackouts all but inevitable."
In the first eight months this year, Yiwu, a city in East China's Zhejiang Province that is also the world's largest wholesale market for small commodities, exported 190 million yuan ($26.5 million) worth of heating equipment, such as air conditioners and electric blankets, up 41.6 percent on a yearly basis, according to data provided by Yiwu customs to the Global Times.
Data provided by Chinese customs showed that in July, the EU imported about 1.29 million electric carpets from China, up nearly 150 percent from June.
The energy crisis in Europe is boosting the heat pump market, Cheng Lin, general manager of MBT overseas business with Midea Group, said on Thursday in an online video conference, along with Europe's efforts to realize carbon neutrality.
"There will be no problem for Midea to become the top three in terms of heat pump output in Europe in 2022," Liu Ligang, deputy general manager of MBT Clivet with Midea Group added.
Heat pumps are becoming an important growth point for Midea Group, whose heat pump exports increased by 200 percent in the first eight months of this year.
According to Cinda Securities, the European market for household heat pumps is set to reach 37.73 million units. With the addition of updated and industrial heat pumps, long-term demand is expected to exceed 40 million units which are valued at 400 billion euros. The market will grow at a compound annual rate of about 10 percent in the next five years, the investment bank said.
Luo Lanxian, manager of a hot-water bag shop in Yiwu, told the Global Times on Thursday that orders from Europe were up about 20-30 percent this year." European customers used to be conservative in placing orders, but this year they're bolder," she said.
Surging orders from Europe are supporting the share prices of some companies. For example, Caihong Group, which exports electric carpets, has seen its stock price rise by the daily limit of 10 percent eight times since September 20.
Caihong said on Thursday that the company has earned about 210,000 yuan as of June for selling household heating products like electric carpets to overseas markets.
Experts said that the rising popularity of Chinese "heating gadgets" is another example of Chinese private economy helping overseas households get through the energy supply crunch.
"Without China, it's hard for Europe to find other sources to meet the mounting market demand, as factories elsewhere can't adjust supply chains as fast as China," Chen Jia, an independent research fellow on international strategy, told the Global Times.
He said that Europe's energy crisis is accelerating demand for closer China-Europe trade cooperation, such as increasing exports of new-energy products from China to Europe, and strengthening the layout of domestic supply chains in Europe.
Meanwhile in the past three months, the demand for thermos bottles rose 89 percent year-on-year and demand for blankets was up 31 percent on Alibaba's e-commerce platform, with major orders from Germany, Poland, the Netherlands, the UK and other European countries, according to statistics sent from Alibaba to the Global Times.
Josep Borrell said it aloud. this is the international rule of order they seek to maintain.
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Citroen CEO has interview. the thing surprizing is that he mention Europa auto market will be 30 to 40% smaller in 10 years due to impact of Covid and chips. assuming that he already taken into account increase migration to EU. this does not take into account loss of purchasing power due to current energy crises.
not a great time for Germany, all from past 24 hours.
Well, I think UK is the most in trouble. They have all the negatives from hawisk attitude toward china and Russia. They have all the negatives from Brexit. They were banking on a great trade deal with America that never happened. They run a huge trade deficit. They are going to get walloped by falling pound and rising interest rate. Their banking sector will get hurt big time by the impending financial disaster. Yet, the British government continue with their ideological craziness.
One easy way out.. a free trade deal with China.