Household appliances are increasingly smart in China, because of the lazy econom...

Household appliances are increasingly smart in China, because of the lazy economy

Household appliances are increasingly smart in China, because of the lazy economy

Weilin Li

posted on December 1, 2021 4:16 am

The young people are facing fierce competition at the workplace, and more pressure at home to take care of their aging parents. Will smart home be a solution?

In a report released on November 18 by the research affiliate of e-commerce giant JD, the domestic shipments of smart home appliances are surging, which derives from the lazy economy. It is a consumption demand with the nature of being time-saving, labor-saving, and convenient. Chinese millennials are the core group in this market phenomenon.

The sector of the smart home is strong and has gained reactions from the capital. In October, Xiaomi-backed Aqara raised over $156 million in the Series C round. Aqara provides compatible routes to Apple’s HomeKit. In the same month, Dreame Technology, a Xiaomi-backed cleaning robot startup, bagged $563 million in Series C round.

Besides, floor-sweeping robot maker Zbeetle secured about $16 million in Series Pre-A round financing in November.

Generally, smart home stands for an Internet of Things (IoT) approach where lighting, climate, entertainment systems, and appliances are connected by technologies like Wi-Fi and Bluetooth for control and monitoring. The market in China has remained strong since 2013.

A tailwind

The concept of smart home is not coined in recent years. The fact is that washing machines and refrigerators frequently found today at home both belong to the category. Respectively, they date back to 1904 and 1913. The term “Internet of things” was coined by Kevin Ashton of Procter & Gamble decades later in 1999.

China’s smart home devices sector began to boom in 2013. That year, e-commerce giant Alibaba launched a set-top box in cooperation with Wasu Media Holding Co, marking a bold foray into the growingly fierce smart TV market. Smartphone maker Xiaomi also followed suit. Major tech companies such as Tencent, Baidu, and JD, have all joined the competition somewhere around that year. Tencent released a humidifier with Yadu in 2014.

The development is continuous. According to Statista, the size of the smart home market in China amounted to over 170 billion yuan in 2020. As for 2021,  IDC predicts that China’s smart home devices shipments will grow by 14.6%.

There are several reasons for the market’s boom. Last year, an obscure word trended online among Chinese people — involution. As reported by Sixth Tone, originally, it was used by anthropologists, but Chinese urbanites used it to describe their modern lives. Parents feel intense pressure to provide their children with the very best; children have to keep up in the educational race; office workers need to clock in a grinding number of hours.

Smart home devices exactly satisfy the needs of the relevant young people. They don’t need to look for the keys while missing the metro, and they can talk to a voice assistant or click on their smartphone to open the door with an intelligent lock.

The growing consumption of smart home devices is also because of the growing population of the elderly. According to China Daily, senior citizens are likely to account for 29.1 percent of China’s total population in 2036.

Wearable devices that can track the biometric data of the elder people are gaining momentum. As of 2019, the number of smart device manufacturers for elderly care has reached 24,400. Some startup companies focus on this type of need, for example, Maimai, Yi Ban Beijing Information Technology Co., Ltd., and Bonvo. They basically provide software and hardware smart care solutions for senior citizens and their communities.

Current players

Generally, the major players facing general consumers include Xiaomi, Haier, and Huawei. In the third-quarter report, Xiaomi’s IoT saw a noticeable increase. The devices connected to its AloT platform, which stands for artificial intelligence of things (excluding smartphone, tablets, or laptop), exceed 400 million for the first time.

As for Xiaomi’s competitors, Huawei has branded itself with the combination of “security plus smart home intelligence.” Haier provides scenario solutions under the brand Sanyiniao, covering the balcony, kitchen, air quality control, water supply, etc.

However, there are several problems with the current development of smart home devices, namely security and privacy, interoperability, and the simple design of products.

The first issue is primarily concerned. The pandemic has facilitated the usage of tools for remote work, leaving space for hackers. In the meantime, many smart-speaker owners don’t realize it, but Amazon keeps a copy of everything Alexa records after it hears its name. Apple’s Siri, and until recently Google’s Assistant, by default also keep recordings to help train their artificial intelligences, the Washington Post reported.

Besides millennials, the Generation Z is joining the group as new shoppers. They are more concerned with the appearance of smart home devices, according to the JD report. They prefer personalized products, leaving opportunities for Chinese companies like Xinbao Electrical Appliances and Bear Electric Appliance, two newcomers for small appliances in the market.

In comparison to developed nations and regions, where the penetration rate of smart home appliance is between 20% and 30%, the penetration rate in China is less than 10%, indicating that there is still a lot of space for future growth.