Q1 Home Appliance 'Cold Snap': Big Three White Goods Makers Diverge After Subsidy Rollback

Introduction: Subsidy Tide Recedes, Home Appliance Market Hits a 'Cold Snap'

In Q1 2026, China's home appliance market encountered a widely anticipated 'cold snap.' According to industry monitoring data, Q1 omnichannel retail revenue for China's home appliance market (excluding 3C products) declined 6.2% year-on-year, ending the multi-quarter growth streak driven by national subsidy policies. Behind this figure lies not only the demand front-loading effect following the cyclical withdrawal of subsidies, but also the growing pains of the entire home appliance industry's transition from 'policy-driven' to 'value-driven' growth.

Notably, against the backdrop of overall market pressure, the Big Three white goods makers — Midea Group, Haier Smart Home, and Gree Electric — exhibited significant performance divergence. Their differing approaches to AI-powered smart transformation are emerging as the decisive factor shaping the future competitive landscape.

Market Overview: Where the 6.2% Decline Came From

The overall Q1 decline did not come out of nowhere. Looking back at the policy rhythm over the past year, the intensive rollout of trade-in subsidies for home appliances across various regions in the second half of 2025 dramatically stimulated consumer demand in the short term, triggering a 'buying frenzy' particularly in white goods categories such as air conditioners, refrigerators, and washing machines. However, this policy-driven stimulus essentially pulled future demand forward. When subsidy intensity began tapering off in early 2026, the market inevitably entered a 'demand vacuum.'

From a category perspective, the hardest-hit segments were those that had previously enjoyed the largest subsidies. Air conditioners saw particularly steep Q1 declines due to the compounding effects of seasonal factors and subsidy reductions. Essential categories like refrigerators and washing machines proved relatively more resilient but could not escape the overall downward trend. By contrast, emerging categories such as integrated stoves, dishwashers, and clothes dryers showed strong resilience, indicating that the consumer upgrade trend has not been reversed by short-term policy fluctuations.

From a channel perspective, online channel declines were smaller than offline, as e-commerce platforms continued to erode traditional retail store share through price transparency and convenience. Meanwhile, livestream e-commerce channels led by Douyin and Kuaishou grew against the trend, becoming one of the few bright spots in Q1.

Big Three Divergence: Who Is Pushing Ahead Against the Wind?

Against the backdrop of industry-wide pressure, the Big Three white goods makers presented a tale of 'fire and ice.'

Midea Group: Diversification and AI Strategy Form a Competitive Moat

Midea Group demonstrated strong counter-cyclical resilience through its diversified business structure and early smart transformation initiatives. Its B2B segments — including building technology, industrial technology, and robotics & automation — offset the downward pressure from its consumer appliance business. On the AI front, Midea's 'Midea Home' smart home platform continued to iterate, with voice interaction experiences dramatically enhanced after integrating large language models, and user engagement maintained steady growth. Midea's 'AI Energy Steward' feature, launched in late 2025, uses AI algorithms to intelligently schedule household appliance energy consumption, becoming an important tool for differentiated competition.

Haier Smart Home: Premium Strategy Put to the Test

Haier Smart Home's long-standing premium strategy faced certain challenges in Q1. While its premium brand Casarte maintained strong brand pricing power, growth in the high-end market also decelerated amid weakened overall consumer confidence. However, Haier's overseas market presence served as a crucial pillar, with revenue contributions from North America and Europe continuing to rise, partially offsetting domestic market volatility. On the smart front, Haier's 'Three-Winged Bird' smart home scenario solutions continued to deepen, achieving cross-category smart integration through an AI scenario engine and maintaining a leading position in the whole-home intelligence space.

Gree Electric: Air Conditioner Dependency Concerns Resurface

By comparison, Gree Electric faced the most pronounced performance pressure. With air conditioners still accounting for a disproportionately large share of revenue, the impact of subsidy rollbacks on the air conditioner category was directly reflected in Gree's financial results. Although Gree has been steadily pursuing diversification in recent years — expanding into new energy, energy storage, and industrial equipment — these new businesses have yet to achieve sufficient scale to smooth out fluctuations in the core appliance business. In terms of AI-powered smart transformation, Gree has taken a relatively cautious approach, focusing more on applying AI technology to enhance manufacturing efficiency rather than building consumer-facing intelligent experiences, where room for improvement remains.

Deeper Logic: AI and Smart Technology as Keys to Navigating the Cycle

Looking through the data fog of Q1, a clear trend is emerging — AI technology is redefining the competitive dimensions of the home appliance industry.

First, AI is transforming the value proposition of products. Traditional appliance competition revolves around hardware specifications and pricing, while AI-powered smart appliances are shifting the competitive focus toward 'experience' and 'service.' For example, refrigerators equipped with AI visual recognition can automatically manage food inventory and recommend recipes; washing machines with AI wash algorithms can automatically match optimal wash programs based on fabric types. These features are evolving appliances from 'tools' into 'assistants,' creating new premium pricing opportunities.

Second, AI-driven whole-home intelligence is generating new demand. Once individual product intelligence reaches a certain level, cross-category scenario integration becomes the next growth driver. Using an AI hub to achieve coordinated control of air conditioning, lighting, curtains, security systems, and other devices not only enhances user experience but also increases per-user spending. This trend is expected to partially offset growth bottlenecks in the mature replacement market.

Third, AI is reshaping operational efficiency for appliance companies. From smart manufacturing and supply chain optimization to precision marketing, AI applications are helping home appliance companies reduce costs and increase efficiency. During market downturns, improved operational efficiency is crucial for maintaining profit margins.

Policy Outlook: A Potential Turnaround in H2

Regarding the market trajectory for the second half of the year, the industry generally holds a cautiously optimistic view. On one hand, as consumer confidence gradually recovers and the real estate market stabilizes, home appliance demand is expected to see a moderate rebound in H2. On the other hand, the possibility of new rounds of consumption stimulus policies being introduced around mid-year cannot be ruled out, particularly targeted subsidies for green and smart home appliances.

From a longer-term perspective, China's home appliance market has entered a critical phase of transition from 'volume-driven growth' to 'installed base upgrades.' In this process, AI-powered smart capabilities, global market presence, and diversified business structures will become the three core competencies determining whether companies can successfully navigate the cycle. The performance divergence seen in Q1 may well be the opening act of this long-term competitive race.

Conclusion

The 6.2% decline is certainly a wake-up call, but for a mature market generating hundreds of billions in annual output, short-term adjustments following a subsidy rollback do not signal a fundamental shift for the industry. What truly deserves attention is which companies can leverage AI technology during this adjustment period to complete their transformation from 'manufacturers' to 'smart living service providers.' Judging by Q1 performance, the answer is already beginning to take shape — companies that embrace AI and embrace change will ultimately welcome their own spring after the 'cold snap.'