Why are an increasing number of customers importing CKD kettles from China?
In recent years, faced with rising global tariffs and logistics costs, local production has become a strategic choice for brands to reduce costs. Therefore, the proportion of CKD kettles exported by our kettle factory is increasing. Today, we will take a closer look at why more customers are importing CKD kettles from China and what CKD kettles are.
What is a kettle CKD ?
CKD (Completely Knocked Down) refers to a production model where a kettle is disassembled into all its components (heating plate, kettle body, thermostat, screws, etc.), exported as parts, and then assembled locally in the target market.
Why are more and more customers importing CKD kettles from China?
Reason 1 Tariffs
The first factor that affects the import method is tariff costs. For the same kettle product, the import tariffs for finished products and CKD kettles are different. For example, in India:
Tariff Comparison of Finished and CKD Kettles in the Indian Market
Basic Tariff Comparison (Updated for 2024)
|
Product Type |
Basic Customs Duty |
Total Tax Rate (incl. GST etc.) |
Conditions |
|
Finished Electric Kettles |
20% |
38%-42% |
Direct Import |
|
Kettle CKD Kits |
10%-15% |
25%-28% |
Requires Local Assembly |
Cost Simulation (10,000 units of 1.8L kettles)
|
Cost Item |
Finished (USD) |
CKD (USD) |
Savings |
|
Import Duty |
42,000 |
26,000 |
16,000 |
|
Logistics |
18,000 |
15,000 (20% space saving) |
3,000 |
|
PLI Subsidy |
0 |
4,000 (4% incentive) |
+4,000 |
|
Total Savings |
23,000 |
Notes: Assumes $10/unit (finished) vs. $8/unit (CKD, pre-assembly); PLI (Production-Linked Incentive) requires ≥30% local value addition
As can be seen from the table above, the tax rate for finished products is 10-15 percentage points higher than that for parts. Therefore, under the influence of tariffs, most Indian customers choose to import kettle parts. In addition, certification requirements are very important in India: finished products must complete BIS certification (a complex process), but only key components of parts (such as heating elements) require certification.
Reason 2. Logistics Costs
In addition to tariffs, shipping costs are also a major factor in choosing CKD kettles. With global freight rates rising, customers are looking for ways to minimize shipping costs and enhance their product's market competitiveness. This is where the advantages of kettles CKD become apparent. CKD kettles are exported as knock-down units, with each component individually packaged and assembled at the customer's local factory. Therefore, a standard 20GP container, a 1.8L kettle can hold approximately 3,800pcs, while a kettle CKD can hold approximately 10,000pcs. Therefore, for the same shipping cost, CKD kettles offer greater capacity and greater cost savings.
Reason 3. Policy support: Government subsidies promote localized production
Global Trends: Many countries have introduced policies to encourage local assembly (reducing import dependence and promoting employment).
|
Country |
Policy Name |
Subsidies/Benefits |
Eligibility Criteria |
|
India |
PLI (Production-Linked Incentive) |
4%-6% production cost subsidy |
Localization rate ≥30% |
|
Egypt |
Industrial Localization Program |
50% income tax cut for 2 years + equipment duty exemption |
Must hire 15+ local employees |
|
Vietnam |
High-Tech Enterprise Benefits |
0% tax for the first 4 years, then 5% for the next 9 years |
Must adopt automated production lines |
Reason 4: Investment Costs
Imported finished kettles don't incur labor, site, or equipment costs, whereas knock-down (CKD) imported kettles do. However, a basic assembly line for ordinary stainless steel kettles requires only three simple pieces of equipment (a kettle crimping machine, a spout spot welder, and a saddle spot welder). The equipment investment is approximately US$30,000 to 40,000. With a monthly production capacity of 10,000 units, achieving cost break-even in approximately two to three months.
How should I choose the import model?
Phased Strategy Recommendations (Monthly Sales >20,000 Units)
Phase 1: Initial Market Entry (Monthly Sales <5,000 Units)
Test the market with finished products first to reduce risk. If your kettle business is new and you have no kettle assembly experience or market share, we recommend initially focusing on imported finished kettles.
Phase 2: Sales Growth (Monthly Sales 5,000-20,000 Units)
Once sales reach the target, switch to CKD to save on tariffs and shipping costs. Once you have established a certain market share and sales are gradually increasing, you can opt for the CKD model, assembling imported kettles from completely knocked-down parts in a local factory.
Phase 3: Established Brand (Monthly Sales >20,000 Units)
Build your own production line and achieve localized production (government support and cost optimization). Once your kettle brand reaches sales volume or you can provide OEM manufacturing services for your customers, you can consider establishing your own local kettle production line. Localized production can significantly reduce costs and help you expand and strengthen your kettle business.
If you are interested in CKD kettles or kettle production lines, please feel free to contact us. We are your free consultant!
Whatsapp/Wechat/Phone:+8618029293151
Email：sales1@vincienegy.com
Contact: Jenny Yao