Midea Group Co.,Ltd. and Electrolux have announced a new partnership in North America, marking their first collaboration in nine years. This move is aimed at accelerating a shift away from traditional OEM exports towards a new model described as "Chinese technology + North American manufacturing + joint venture brands." The strategy is designed to mitigate risks arising from increasing US tariffs and declining demand.
The partnership involves establishing three joint ventures in North America. These include a sales joint venture for refrigerators and freezers, in which each company will hold a 50% stake. Additionally, Electrolux will transfer a 65% ownership stake in its refrigerator factory in Juarez, Mexico, to Midea, retaining 35% for itself. Furthermore, Electrolux will transfer a 45% stake in its laundry care appliance factory in Anderson, USA, to Midea, while keeping a 55% stake. These joint operations are scheduled to commence in the third quarter of 2026.
This is not the first time the two companies have collaborated. Three years ago, in the first half of 2023, Midea explored acquiring the loss-making Electrolux to strengthen its portfolio of mid-to-high-end brands in European and American markets, but abandoned the acquisition intent by mid-2023. Prior to that, in May 2017, the companies formed a joint venture to introduce Electrolux's German premium appliance brand AEG into the Chinese market, though AEG's subsequent development in China did not meet expectations.
An industry analyst pointed out that Midea previously lacked its own production base in North America, relying heavily on exports from its Chinese manufacturing capacity, predominantly through OEM arrangements, with a weak presence for its own brands. With North American tariffs set to rise持续提升 in 2025, the cost of the traditional export model is surging, significantly constraining its market expansion there. By leveraging Electrolux's brand portfolio and offline channels, Midea can rapidly penetrate the high-barrier North American market and enter the mid-to-high-end appliance segment. Simultaneously, by taking controlling or minority stakes in local factories, Midea is establishing localized production capacity in North America, thereby bypassing tariff barriers.
While Electrolux has a long-standing presence in North America, its operations there are currently loss-making, plagued by issues such as insufficient production efficiency, high manufacturing costs, and intense industry competition. The company has conducted multiple rounds of layoffs in recent years and plans to shut down the refrigerator production line at its Anderson, USA, factory in July 2026, shifting that production to the joint venture factory in Juarez, Mexico.
In the first quarter of 2026, Electrolux reported revenue of 295.4 billion Swedish krona, a decrease of 0.5% year-on-year, with sales in North America falling 11.6%. The company recorded a net loss of 4.7 billion Swedish krona, primarily attributed to losses in its North American business, where increased US tariffs led to higher costs and a significant slowdown in market demand. While local product prices saw a slight increase, it was insufficient to offset the cost increases from the tariffs.
The analyst believes that through this cooperation, Electrolux can monetize assets and generate cash flow by selling partial stakes in its overseas factories, while phasing out inefficient capacity. It also allows Electrolux to introduce Midea's mature manufacturing and supply chain systems to reduce costs and improve efficiency, accelerating its business transformation.
"This reflects the evolution of Chinese home appliance companies from 'product export' to 'supply chain globalization,' indicating a more diversified and mature overseas expansion model," the analyst said. This collaboration is expected to increase market concentration in the North American major appliance sector, accelerate the shift of local appliance production capacity and supply chains to Mexico, and reshape the industrial landscape of North America.
"The future North American major appliance market will feature competition among European/American capital, Chinese capital, and South Korean capital. As the cooperation between Midea and Electrolux deepens, the market share of Chinese companies' own brands in North America is expected to gradually increase. Meanwhile, competition in the high-end segment of the local appliance industry will become more intense," the analyst added.
Comments