China’s Robam Bets Big on the Smart Appliances Market
Zhao Jihong, President of the Hangzhou-based high-end kitchen appliance maker Robam, believes that the future belongs to smart appliances.
The hype surrounding the smart home concept has caused what some media dubbed “a collective panic attack” for Chinese appliances makers. Virtually all players in the field, big or small, have rushed to roll out smart products that can be connected to the internet and cellphones.
Hangzhou-based Robam is one of them. The 37-year-old high-end kitchen appliance maker announced a new smart cooking system called ROKI earlier this year, in hopes of unleashing the inner Masterchef of even those who hate cooking. ROKI, mainly consisting of a range hood and a gas stove, will provide hundreds of recipes and cooking instructions through a large display on the range hood. Once a dish is selected, the system will automatically adjust the ventilator’s fan speed as well as the firepower on the stove to fit the specific requirements of cooking the dish.
If the functions above sound a little too flashy, here is the more practical perk—Robam is putting together a grocery-shopping platform that will deliver food materials you need to your doorstep (remember Amazon Dash?). The service is not available yet, but the company says it’ll launch as soon as its on-going negotiations with logistics companies come through.
Compared with bigger industry players like Haier and Midea, Robam is in its own sweet spot because it focuses only on kitchenware. It currently leads the market in range hoods and gas stoves, taking up 16% and 14% of the market share by the end of 2014, according to research firm China Market Monitor. Since the company concentrates on the high-end market, its share of the retail market is even higher, reaching 24% and 21% in the above two product categories respectively.
Fifty-three-year-old Zhao Jihong, Robam’s President, says that the company’s success comes due its dedicated efforts to become the leader in one specific area. “We have been very focused all these years,” he says. “[My philosophy is that] even an elephant will be afraid of being pricked by a needle.” During a recent interview with CKGSB Knowledge, Zhao shared his thoughts on how Robam is pulling ahead in a diverse and competitive Chinese market.
Q. How do you position yourself in this frenzy of smart appliances? What does that concept mean for Robam?
A. The concept has been widely discussed within the industry for more than a decade. It’s gaining popularity now because technologies are maturing—mobile internet has become very popular in the last couple of years and software support is ready as well. More importantly, the consumers are ready—they know how to use them and they want to use them.
For us, we have three principles when designing our products—automation, interaction and affection. “Automation” means that our products should replace human labor as much as possible; “interaction” means that our products should be a channel for us to communicate with our customers; and “affection” means that through our interaction and services, we want customers to be emotionally connected with us.
Q. How do you appeal to your customers emotionally?
A. Many modern families are very busy with work and they don’t have time to cook at home. Or they never learned how to cook a delicious meal. But through our system we can deliver the materials to your house and walk you through the process of cooking a nice dish. We hope that this will make cooking a fun and elegant process.
We want our product to be a calling for your loved ones to come home and have meals together. We want to be the reason that your families are spending more quality time together.
Q. The pricing for the ROKI system is pretty high—RMB 28,888 (about $4,660). The average prices for such products are probably just less than a third. Have you considered entering a lower-end market?
A. We do have a RMB 8,888 version of ROKI, which doesn’t have the big display on the range hood so people have to use their cellphones to see the recipes and instructions. But we’re not moving away from our target audience, which is the high-end. I believe that our products have unique humanistic values that you can’t find elsewhere.
Q. What are the values? How do customers perceive the values?
A. We want our customers to feel that they are valued and their money was well spent. We try to do this through providing proactive and unique services.
In our new smart systems, we are monitoring the status of the products and will be able to detect malfunctions in real time. We’ll also reach out to our customers when their appliances need maintenance so they don’t have to worry about finding us.
We have a nationwide service network that allows us to provide door-to-door service within four hours of the initial request. Why four hours, not 24 hours? Because that is the time gap between two meals. Once there’s a problem with our product when the customer is cooking lunch, we don’t want him or her to be complaining about the same problem when preparing dinner.
Q. Haier has been doing this ZZJYT (stands for zi zhu jing ying ti, or smaller independent units inside a large corporate system) movement for a while, where they try to break the big group into smaller, and more entrepreneurial teams. Does Robam do something similar?
A. My understanding is that no matter the form, the fundamental idea of such movements is to encourage participation of the employees in the operation of the company.
So Robam, from the very top level, has been promoting the idea of partnership in the past decade—everyone is a partner of the company, not just employees. Like what you see in law firms, many of our employees have shares of the company, and we’re trying to cast the net even wider. So in the future, we want Robam to become a company run by partners, like you often see in the legal business or finance business.
Q. What’s the share of e-commerce in your overall sales?
A. Our main sources online are the Tmall, JD.com, Suning and Gome Online (the last two are online stores of traditional electronics retailers). We have our own online store as well, which is a complement to the other channels. Right now more than 20% of our sales are online, but the sector is growing very fast at a pace of more than 60% every year.
Q. What do you say is the secret to Robam’s success? Are you going to the overseas market?
A. Small is big, less is more. For decades we only focused on kitchenware. In that sense, we are actually quite small compared to some of the giants in the industry. We have about RMB 3.6 billion ($581 million) in revenue; the biggest player can sell more than RMB 100 billion each year.
But we focus on building a niche and high-end brand. As a Chinese company, we dare to compete directly with the best brands from the US, Europe and Japan. We all eat from the same rice bowl, and Robam can eat more than others—that’s how we establish a strong brand. [My philosophy is that] even an elephant will be afraid of being pricked by a needle.
With regard to overseas markets, we are mainly focusing on Southeast Asia. I believe we will be able to copy our China success there because China is an international market itself. The competition here is very thorough.
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