The days when domestic manufacturers were able to rely on cheap labor to gain strong profits are gone for good. Employees will become more and more insistent in their demands for wage increases and corporate benefits. In the face of faltering domestic and external demand, waning demographic dividend and rising wages, similar incidents are likely to occur in China in years to come, analysts say.

Pang Kun, a lawyer from the Guangdong-based Hantai Law Firm, said strikes and disputes on wages had frequently occurred in the Pearl River Delta in years past. "Sometimes, there were even several incidents within the space of a month. It usually happened in labor-intensive manufacturers."

Time to change

Are there any survivors left in the home appliance market? The answer is yes. Some domestic appliance providers have managed to climb up the industrial value chain and have broken out of the vicious circle.

In 2013, the business revenue of China's household appliances totaled 1.28 trillion yuan ($204.7 billion), up 14.2 percent while net profits amounted to 78.4 billion yuan ($12.5 billion), surging 28.7 percent year on year, according to data from the Ministry of Industry and Information Technology.

Jiang Feng, President of China Household Electrical Appliances Association, attributed the better-than-expected profit growth to accelerated technology innovation and industrial upgrade.

Most products are too similar to one another. Only by upgrading product functions and meeting differentiated user demands can China's appliance companies make breakthroughs, Jiang said.

Stirred up by the fact that many Internet companies are making forays into the home appliance market, traditional appliance makers are changing their game plan to keep up with the times. Internet-based smart products would appear to be the future of the market.

Founded in 1958, the Sichuan-based household appliance maker Changhong was devoted to the research and development of smart appliances. In March, Changhong released an air conditioner model called CHiQ. Combining human-status-sensing technology, cloud computing and big data analysis, the air conditioner can automatically adjust functions to bring about the best user experience while at the same time lowering energy consumption.

"Traditional air conditioner makers have always emphasized energy saving, quietness and constant temperature but ignored that different consumers have different needs," said Liu Tibin, General Manager of Changhong.

On March 17, appliance maker Haier released a smart household operation system. Users can employ the system to connect all their smart terminals at home. The same day, leading market player Midea released eight smart air conditioners based on its cooperation with e-commerce leader Alibaba in cloud computing. Earlier in April 2013, Midea announced that the company would stop producing and selling microwave ovens priced at less than 599 yuan ($96) and focus exclusively on high-end appliances.

Some companies are in the process of transformation. Some have had a clear target since their foundation.

Established in 1993, the BOE Technology Group is a supplier focusing on semiconductor display technologies, products and solutions. To date, BOE has 18,000 patents in hand. BOE is the only domestic firm that has acquired the core technology of thin-film-transistor liquid-crystal display (LCD). Relentless efforts in research and development on LCD core technology have made the company the world's fifth largest LCD panel maker in terms of shipment.

In July 2013, BOE raised 46 billion yuan ($7.36 billion) in the equity market to expand construction of high-generation panel production lines and carry out acquisition. To date, BOE has invested over 100 billion yuan ($16 billion) in LCD research, development and production.

Lu Renbo, Deputy Secretary General of the China Electronics Chamber of Commerce, said product homogeneity is a very serious issue nowadays.

"Home appliance makers should always keep two things in mind—technology innovation and better branding."

Liang Zhenpeng, an analyst for the industry, said China's home appliance sector is transforming toward being smart and IT-based.

"Industry players are transforming from mere hardware manufacturers toward being user-centered system integrators, software developers and service providers. Their connections with the Internet will be closer than ever," Liang said.

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