Who are some of the main players in the Chinese smart home market?

The rapid growth of the IoT sector has drawn in Huawei & Xiaomi, which should give them a path to continued growth, according to industry experts.

Currently, China is the world’s largest IoT market, with 64% of the 1.5 billion global cellular connections. On a global scale, the economic impact of IoT should reach USD 11 trillion by 2025, according to McKinsey.

The Chinese government is also proactive in creating policies for smart cities and IoT. Already in June 2019, the Chinese Ministry of Industry and Information Technology issued the first 5G commercial licenses to four major telecom carriers, which is the groundwork for faster communication speeds in various sectors, including IoT.

Who are some of the main players in the Chinese smart home market?

Apart from the aforementioned Huawei and Xiaomi, there are also home appliance companies represented by Midea, Hisense, and Yunmi, internet companies such as Aqara, Ou Ruibo, and EZVIZ, communication operators represented by China Mobile and China Telecom, as well as real estate developers such as Country Garden, Intime, Longfor, to name a few. Seeing so many big Chinese companies trying to get into this market makes the smart home industry comparable only to telecommunication (smartphone) and the EV industry.

On July 4, Huawei and Xiaomi held the 2022 summer new product launch conference almost simultaneously. Two technologies are the core of Huawei's smart home system: ICT technology for network problems, computing, and localized storage in the smart home, and Harmony OS (HongMeng OS) – Huawei’s operating system with improved cross-platform capabilities designed to deliver a new user experience across all devices and scenarios.

It's clear that Xiaomi has plans to be one of the major smart home players in China

Some of the connected Xiaomi gadgetry includes more than 50 security cameras, five smart fridge models, four smart speakers, a couple of connected washing machines, 20 robot vacuum cleaners… and much more.

The Xiaomi Mi Home app

Like any good smart home ecosystem, the Xiaomi Mi app allows you to connect your smart home devices while delivering a smooth experience across all scenarios. In Xiaomi's 1+N+X vision, smartphones will become enablers for other connected devices to offer all-scenario services with various applications. Xiaomi has started manufacturing IOT home appliances instead of choosing OEM (original equipment manufacturer), and the brand’s products are ever-increasing in quality, which has consolidated its position in the smart home market.

And what about Huawei?

Compared to some manufacturers whose smart home relies on routers and central control screens, Huawei has invested time, energy, and cost to develop a series of smart host products, with a "1+8+N" strategy at its core, which refers to smartphones, 8 smart devices, and other products manufactured by its partner companies. Before Huawei, there were already several local smart home system manufacturers, but with limited technical capabilities, and relying on IFTTT.

Let’s first look at the traditional home appliance brands led by Haier, Midea, Hisense, and TCL which have obvious advantages. At Midea Group's Smart Home Conference held on May 20, the company released a new smart home solution and Midea's "3-6-5 Active Total Smart Home Ecosystem" layout. On May 10, Haier launched the "1+3+5+N" smart home solution. Similar to the Smart Home by Midea Group, Haier’s so-called Tri-wing Bird smart home system integrates home design, construction, and home appliances.

The local brand Hisense is not limited to homes – it has expanded its services to communities and cities. The company has therefore launched a “smart new life” 1×3 X N layout, where “1” stands for "one screen" used for “3” platforms, namely Hisense Home, Hisense Community, and Hisense City. The letter “N" refers to the smart multi-scenario solutions.

The aforementioned home appliance companies have strong market positioning which ensures a steady flow of loyal customers. However, with the new generation of smart homes, it is no longer possible to rely on individual products to meet consumers' demands. The biggest competition comes from companies such as Huawei and Xiaomi, which are known for advanced integration technology.

Emerging companies are gaining momentum

Lumi follows the example of Xiaomi in terms of cost-effectiveness and simplicity of design that is aimed at the younger customer persona. Therefore, Lumi's products are lightweight and user-friendly, which can be easily integrated into the busy life of young people. However, the brand still doesn’t have a competitive advantage over more established brands. Lumi joined Xiaomi’s ecosystem in 2015, and its manufacturing is still highly dependent on Xioami.

Ou Ruibo originally specialized in radio frequency smart sockets and joined the smart home market in 2017. The brand is focused on design and user experience, but it still doesn’t have the secure hardware and software architecture of more established brands. Therefore, its products still experience quality issues, as well as various challenges in production and supply chain, and supply quality control issues, to name a few.

Compared to other emerging brands in the market, in the past 4 years, EZVIZ has steadily increased its revenue from 1.529 billion in 2018 to 4.237 billion in 2021, despite the economic instability caused by the pandemic.

This year, after launching a series of new products such as wireless cameras, smart doorbells, smart locks with cameras, smart central control screens, and Wi-Fi6 smart home solutions, the company has announced the "1+4+N" ecosystem and has released three products: AI sweeper RS2 (smart cleaning robot), fluorite sterilization scrubber RH2, and Yingbao RK, revolutionary robot companion for children. The business of EZVIZ is aimed at the end-users, and the company keeps launching new smart home products that have quietly revolutionized China’s smart home market.

Internet companies represented by Baidu and Alibaba are also worthy of our attention, however, these companies don’t have their hardware. They partner with other smart home companies and provide various ecosystem services. At the end of the day, smart home systems rely on networks provided by internet companies, and the Internet company and the network provider play an irreplaceable role in creating a competitive edge for a smart home company.

E.g., China Telecom established Tianyi Smart Home Technology, which is committed to providing users with smart home products in the four core business sectors of "Smart Entertainment", while China Mobile released the "HDICT Digital Smart Life+" plan for smart homes, working with partners to provide users with customizable, end-to-end smart home comprehensive information solutions, focusing on scenarios such as smart homes, smart communities, healthy elderly care, and safety.

China’s smart home market promises high growth potential, and companies from a wide range of industries can benefit from this. The smart home industry is expected to drive technical advancements and create common standards that will push manufacturers to take a long-term forward-thinking perspective.