Source: All View Cloud Author: Zhao Meimei
With a slowing economic growth, China’s home appliance industry came under pressure from both the domestic and overseas markets in the past 2016. In this case, structural growth points matter even more. But what is the strongest growth point in domestic home appliance market at this stage? The answer, with no doubt, is smartness. Powered by the rapid expansion of the Internet, IoT and 4G wireless networks, the era of smartness comes as an irreversible trend, fueled by the emergence of intelligent wearable devices, the active engagement of home appliance makers and an increased recognition from users.
The penetration of smart televisions in China in 2016 has already reached a whopping 83% with a sales volume of about 42.01million units, according to statistics from All View Cloud (AVC).
Year 2015 saw leapfrog development of refrigerator smartness. Offline monitoring data from AVC shows that offline retail sales of smart refrigerators posted a penetration rate of 3.5% for 2015. For the second half of 2015 in particular, the penetration rate reached the highest of the year, posting 11.7% during the promotion week of Double 11 Shopping Festival. In 2016, smart refrigerator market leveled off with no dazzling performance. Gross data from AVC indicates a market size of 1.35 million units for 2016, worth 6.2 billion Yuan. The author believes that, smart refrigerators, at the tipping point of business model transformation, fail to achieve a breakthrough partly due to weak interaction interfaces and unsound eco-systems. Smart refrigerators have passed the introductory stage and entered a growth phase. It is estimated that by 2020, the size of smart refrigerator market will reach 3.7 million units, valued at 15 billion Yuan.
As the fastest growing sector, smart washing machine segment have gone through three periods. The first period was before 2014, when smart washers were slowly nurtured and started to be noticed by the market. Offline monitoring data from AVC indicates that sales penetration of smart washers was roughly 6.1% in 2014. The second period was 2015, when popularity of smart washers exploded across the board, with market penetration surging to 14.2%. The third period ranges from 2016 and the next few years onward, when growth of smart washers is expected to skyrocket and gradually transition toward popularity. AVC gross data shows that the market size of Chinese smart washer market in 2016 posted 3.4 million units, worth 9 billion Yuan. It is expected that by 2020, the market size will reach 7 million units, worth 20 billion Yuan.
Smart air conditioners were a major highlight in AC industry in 2016. Statistics from AVC suggest that, retail sales of home-use smart air conditioners for 2016 accounted for 20.1% of total. Smart air conditioners took a big proportion online, and were expanding presence offline. AVC forecasts that smart air conditioner segment is expected to account for more than 30% of the market in 2017. Smartization does not simply mean Wi-fi connectivity or long-distance control. Instead, self-cleaning, comfortable wind and ventilation, interactive controls and more will gradually be regarded as standard amenities of smart air conditioners.
Smartization has become an irreversible trend in Chinese home appliance market. With smart products rolled out from all categories and smart home systems established by enterprises, smart appliances have come a long way. But it still has much more to do due to the inadequate coverage of its network.
Two issues must be solved for smartization to go forward: Firstly, product homogenization. Instead of designed to meet users’ demands, many smart products nowadays are designed simply as a mix of current functionalities, or are only passively smartized to face the rising trend.
Second issue is a lack of unified standards, which hinders the connectivity among products from different companies and of different categories. Smooth connectivity is a prerequisite for a network of smart appliances that offers long-distance control for users and connectivity among brands. Without it, smart household appliances and home furnishing will lose the meaning.