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Realising the great opportunities offered by the Internet of Things (IoT) and Industry 4.0, Midea Group Co Ltd has established a “dual-smart” corporate strategy to develop connected appliances in the direction of smart appliances and connected manufacturing in 2015. Although LG Corp and Samsung Corp are still leading global connected appliances development, Chinese rivals, including Midea, are catching up, leveraging the home turf advantage in China, which is the world’s leading market for connected appliances adoption. Midea’s sales of connected appliances in China were a significant factor contributing to its 14% surge in net income in the January-June 2016 period, disclosed in its first-half 2016 report. This opinion article provides the reader with a brief overview of Midea’s latest efforts in connected appliances development as it looks to improve its global competiveness.
Unlike LG Corp, Samsung Corp and others, which have strong research and development capabilities in both consumer appliances and consumer electronics, to leverage synergies in connected appliances, Midea has established strategic partnerships with consumer electronics companies such as Xiaomi Inc in 2014 and Huawei Technologies Co Ltd in July 2016 to offset its weakness in consumer electronics in order to speed up connected appliances development. For example, in mid-2015, Midea launched connected air conditioners that can monitor consumers’ body temperature via Xiaomi’s smart wearables so as to suitably adjust air conditioner settings. After acquiring Toshiba appliances this year, Midea will be able to integrate the Toshiba appliances research and development team in connected technologies into its global research and development team. For connected appliances, Toshiba appliances has been working in the areas of cloud computing, voice control and sensing, for example, since 2009, in which Midea has also been investing.
Consumers are unlikely to always buy appliances from the same brand, so one of the pain points from consumers using the current generation of connected appliances is that appliances of different brands cannot communicate with each other, so that consumers have to manage this via multiple apps. To improve inter-connectivity among appliances, Midea joined The International Roundtable of Household Appliance Manufacturer Associations (IRHMA) in 2014 and AllSeen Alliance Inc in 2015, and established partnership with IoT platform company Ayala Networks in August 2016, among other things. In addition to building access for its connected appliances to its own M-Smart platform, Google’s Brillo platform and Apple’s HomeKit platform, Midea has also been developing connected appliances with the two leading Chinese online retailers’ platforms – Alibaba Group Holding Ltd’s Yun (Cloud) OS and JD.com’s smart cloud – for the Chinese market. Considering internet retailing (such as grocery retailing connected to fridge freezers and detergent retailing connected to home laundry appliances and dishwashers) is one of the keys to building the business eco-system around connected appliances, Midea is advised to establish further collaborations with international internet retailers such as Amazon.com if it plans to launch connected appliances in overseas markets, such as one of Amazon’s key markets, ie the US.
Source: Midea Group Co Ltd and DGtle.com
From the connected appliances functions perspective, Midea has been working on direct interaction between consumers and connected appliances. For example, in August 2016 in China, Midea launched i+ connected air conditioners, which can be controlled by voice and hand signals, in addition to smartphone control. The voice and hand signal control are convenient for the consumer segments wanting to relax at home after work without using smartphones and computers, especially if they are overwhelmed by computers and smartphones at work.
Source: Midea Group Co Ltd
Moving forward, although Midea has made significant progress in the development of connected appliances, there are still unique technologies from its rivals representing areas in which Midea is recommended to improve. For example, Sharp Corp developed the dialect voice recognition capability in its high-end robotic vacuum cleaner models sold in Japan so that they could understand the Japanese Kansai dialect, in addition to standard Japanese. Even in China, there are many local dialects, such as Cantonese or Hokkien. How can connected appliances built with Mandarin recognition capability serve consumers who do not speak Mandarin, but either speak in a dialect or use Mandarin with an accent? In addition, LG Corp unveiled SmartThinQ Sensor, a kind of connected module, in 2015, to transform non-connected appliances into connected appliances. For major appliances with replacement cycles usually from seven to 12 years, not all consumers will buy connected appliances before the end of the replacement cycles of their existing appliances. The connected modules allow the consumers to experience basic connected technologies at a lower cost compared with buying new connected appliances and to get them hooked up to connected technologies so that there will be a greater chance of them buying connected appliances when they are replacing existing appliances.
In future, development of connected appliances into smart appliances will not only be about connectivity, but also about services to users, which will form a huge eco-system, where the platform of connected appliances is the key to controlling the eco-system. That is why appliances companies such as Midea, Haier, LG and Samsung as well as smartphone OS providers such as Google and Apple, even retailers such as Alibaba and JD.com, are competing through putting forward their own platforms. The types, brands and quality of service providers available on the platform will also be one of the key factors for differentiation and for consumers’ purchasing decisions when it comes to appliances brands. Thus, moving forward, Midea is advised to establish collaboration agreements with multiple service providers in different markets to support the sales growth of its connected appliances.
For more details, please refer to the Midea Group Co Ltd global company profile.