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The Next Big Gold Rush: China’s Smart Home Market

by Li Hui

May 29, 2015

Several companies—from tech giants like Alibaba to durables manufacturers like Haier—are placing big bets on the Smart Home market in China. A look at who’s doing what.

Although the concept of Smart Home is still in the early stages of development in China, it promises to be a potential gold mine. According to Juniper Research, by 2018, China’s Smart Home market is likely to expand to RMB 100 billion ($22.8 billion), and Chinese companies are jumping in to get a piece of the pie. Powering the growth of the industry in China is the consumers’ urge for change: Chinese tech news portal Zol.com’s 2014 survey revealed that 54.9% of the respondents are very interested in converting their homes into Smart Homes, while 36.8% are “fairly interested” in this idea.

The tech and white goods giants have already started making moves in this industry. E-commerce giant Alibaba has teamed up with white goods manufacturer Midea to co-produce a smart air conditioner which is now available on Tmall. According to Alibaba’s cloud service, Aliyun, 30% of all the air-conditioners sold on Tmall are already smart ACs and smart ACs experienced an explosive growth of 1,331% in the year of 2014.

Apart from Alibaba, Midea has also tied up with many other companies, such as smartphone manufacturer Xiaomi. For RMB 1.266 billion ($203 million), Xiaomi now holds 1.29% of Midea’s share. Through this alliance with Midea, Xiaomi now has both the brains as well as the muscle power to take on the Smart Home market. In addition, JD.com, the country’s second-largest e-commerce company, is also exploring the Smart Home domain with Jing Dong Wei Lian (literally translated as ‘JD.com micro connection’). The “super app” designed by JD.com enables users to remotely control home appliance connected to the app no matter when and where they are.

In January 2015, white goods manufacturer Haier officially partnered with Chinese smartphone maker Meizu to create connected home appliances. Haier also has collaborations with Baidu, Alibaba, Tencent and Microsoft among others. Wang Ye, Vice President of Haier, says that sharing and partnering is fundamental for the growth of this industry. “We have some big players in the market, all [whom] have their own boundaries, but they have to change, make connections to provide the perfect user experience to consumers,” he says.

So who will get ahead in this market? That is yet to be seen. In a survey initiated by Tencent, when asked the question “What kind of company is more likely to succeed in the Smart Home market?”, 53.68% of the respondents believed that the big internet companies have a better chance, 31.93% voted for start-ups while only 14.39% chose traditional home appliance manufacturers.

To find out more about how Chinese companies are trying to get a piece of the pie in China’s nascent Smart Home market, click on the infographic below.

Smart-Home-Companies

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