BEIJING (TheStreet) -- A debt-warning flag was hoisted this week after Whirlpool (WHR - Get Report) won control of a smaller, European appliance maker called Indesit. But Whirlpool did not account for the deal's psychological impact on the Chinese competition.

Whirlpool's victory troubled Fitch Ratings but psyched out the American appliance maker's Chinese rivals, some of which -- like Haier (HRELF) -- are currently downsizing and struggling to compete in western consumer markets.

When Whirlpool won control of Italy's Indesit with a nearly $1 billion bid, worth just over $15 a share, it dealt a blow to appliance manufacturer confidence in China at a critical time for the sector. And that alone could prove well worth the debt attached to the deal that Fitch warned could lower Whirlpool's credit rating.

Microsoft Announces Massive Layoff, Cutting 18,000 Workers

Cliffs Natural Resources Breaks Activist's Way After ISS, Glass Lewis Support

40% Would Quit Their Jobs for Better Health Care

Google's Future Continues to Depend on Mobile Ads

The American company beat what Chinese media said was a $12-a-share offer from TV-appliance conglomerate Changhong on behalf of its refrigerator division Meiling. A business newspaper complained that Whirlpool had "snatched a meal" from China's mouth.

Changhong is a Mao Zedong-era state company that's been making televisions since 1958. To supplement domestic sales and global exports, it's expanded into Europe in recent years by buying a compressor company in Spain and building a TV factory in the Czech Repiublic.

An Indesit buyout would have added a feather to Changhong's cap by giving the Meiling unit its first foothold in Europe. The National Business Daily newspaper quoted "inside sources" as saying the company's domestic refrigerator business has grown "dull and mediocre," prompting Changhong's Indesit bid and a push to expand abroad.

China's largest appliance maker, Haier, which goes head-to-head with Whirlpool in the U.S., is also losing its shine. At a conference last month, Haier CEO Zhang Ruimin said the company was undergoing a "transition" that would require laying off about 10,000 of its 55,000 employees by the end of 2014. Most cuts were to be in mid-level management. Several thousand were laid off last year, too.

State media quoted Zhang as saying that Haier is "walking on thin ice."

In another sign of the transition under way for Chinese appliance companies, Midea last month bought 20% of smaller rival Little Swan. And since last fall, appliance maker Gree has been rattled by a recall of 2.5 million dehumidifiers sold in the U.S.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.