/The top 3 opportunities for China’s Smart Home future

The top 3 opportunities for China’s Smart Home future

“Smart home” was first introduced in the early 1980s as a project of the National Research Center of the National Association of Home Builders (NAHB). Originally, devices and appliances in smart homes can be controlled remotely. For example, you can remotely turn off the air conditioner in your office or preheat your home 30 minutes before going home. With advancements in technology, almost every device can be connected to the smart home network. Now, you can feed your fish remotely or automatically. Business Insider found that global shipments for connected-home devices will grow much faster than smartphone and tablet device shipment growth.

China’s booming Smart Home market

In China, there are several substantial drivers for the smart home technology boom. First of all, the household appliance market in China’s urban areas is saturated. You can hardly find a family living without essential home appliances. Second, China is transiting from being the net exporter or world’s manufacturer to a more market-oriented economy. According to the China Household Electrical Appliances Association’s findings, sales revenue for home appliances slowed down from 2011 to 2015. Last of all is the demand of young tech-savvy consumers. These high demands include upgraded home appliances and service robots.

From a survey conducted by China’s leading digital gadget website Zol.com, 54.9 percent of the respondents showed strong interest in converting their homes into Smart Homes, while 36.8 percent are “fairly interested”. This shows that China’s young consumers are very open to this new wave of innovation. Moreover, a study done by Germany-based researcher GfK last year revealed that more than 75 percent of the people interviewed in China believed that smart home technology would impact their lives in the next few years, higher than the global average of just over 50 percent.

China’s smart home market scene can be summarized as a model of the “white goods company + internet company” partnership. For instance, “Midea + Alibaba/Xiaomi”, “Haier + BAT/Meizu/Microsoft”. This type of partnership largely enables the marriage of goods production, wireless technology, and B2C sales platform.

A small portion of China’s smart home market is shared by some startups who focus on more specific technologies such as language recognition. For example, the joint venture Beijing LingLong developed Dingdong, a Chinese version of cloud based voice-enabled smart home device similar to Amazon Echo and Google Home.

ding dong
Screenshot of DingDong from an online store on JD.com.

Smart home innovation opportunities in 3 points

China’s smart home market is burgeoning, but it is still at an early stage. The current industry focus is transiting home appliances from labor-intensive to innovation-based. Most Midea and Haier smart home devices are designed to be easily controlled by mobile phone apps. They also offer additional services. For example, your future laundry machine can recognize the materials and colors of your clothes by washing and drying them at the right temperature. You can also have a refrigerator screen showing you suggested recipes based on the items in your refrigerator, watch videos on the refrigerator screen while preparing dinner, or make food deliveries via the screen. But do you really need a RMB 8,000 (USD 1,162) refrigerator to check some recipes, order food, or watch videos? Some of your favorite apps can already do the same work, right? Here is a serious look at some potentials for China’s smart home innovation sector in the next 30 years.

1.     Sustainability

NEST is the most popular self-learning smart home control device in the United States that helps people save energy from home appliances, in particular heating and cooling systems. NEST doesn’t work in China. It is not surprising that a local company hasn’t offered similar devices in China yet. Currently, energy costs in China are not high enough for people to be aware of energy efficiency. Utility companies in the U.S. are more than willing to incentivize people to install smart thermostats to help reduce the peak load of power generation.

nest
Photo from Nest

A simple app or a device controlled by people cannot optimize the settings based on outside temperature, the room ambient temperature, the occupant’s activity level, the ventilation rate, and so on. Only smart home devices have the self-learning ability to successfully meet individual household needs.

In a recent 2017 Q1 Midea newsletter, I did not see any smart devices like NEST. However, I believe that there will be a demand for self-learning smart devices for those who do not want to upgrade all their home appliances to something crazy expensive, but to make their lives more sustainable and comfortable. Traditional white goods giants have little interest in low profit small devices, but it may be an opportunity for startups.

2.     Health and wellness

Home is where we rest and recharge. Creating an environment to nurture our emotional and physical needs has to be prioritized. There is a growing demand for better indoor environment quality in China. Real-time AQI apps can tap into some air purifiers or monitors. For example, Air Matters can connect to Laser Egg monitors in your home.

Photo courtesy of Origins
Photo courtesy of Origins

However, very few smart products are designed for optimized ventilation in residential homes. The new Samsung range hood has a Bluetooth feature paired with the Samsung cooktop. The hood fan will automatically turn on or off when the cooktop is switched on or off. This is not how kitchen range hoods are normally used in China. We would normally prefer leaving the fan on until the oily smell completely disappears. A smart device should be able to recognize when it is best to turn off the fan depending on air quality measurements. It is even better if kitchen appliances are able to capture cooking habits and automatically turn on the ventilation system to the boost mode several minutes ahead to continue to exhaust until the sensor detects no residual oil. The system should be able to automatically adjust when the air conditioning system is working to avoid energy waste.

3.     Product designs for elderly and/or disabled people

China is getting old, much faster than anywhere else in the world. The new R&D opportunity will be an advanced smart home system with high self-learning abilities and sophisticated recognition functions. The sensor-based and self-learning system assures quick and accurate actions to respond to different conditions. For example, some sort of reminders that can be set for Alzheimer’s diesease. The movement tracking system can detect spatial differences, and it will be extremely helpful to set up alerts when abnormal non-movement or fall appears.

Unlike devices designed for young tech savvy people, the interface design won’t be app based, but it will be highly dependent on voice, gesture, automatic recognition or machine learning. It makes old people’s lives easier without interruption or distraction. The same idea can be applied to disabled people who live alone.

lively sensor
A medication sensor for seniors to ensure timely medication consumption. Photo from Live!y.

China is already and will be the biggest market for smart home technology. The growing demand and increasing purchasing power for upgraded household appliances are currently the biggest drivers. Moreover, the Chinese government is becoming more cautious about power production and water usage. Fossil fuel depletion and water scarcity will accelerate the next innovation movement for smart home technology, and will focus on energy and water efficiency. Health and home well-being are no longer niche markets, but it is more easily adopted by people. Another direction for smart home technology will be advanced recognition, tracking and self-learning devices with negligible human interface for the elderly or disabled.

(Top photo from Pexels)

Fang Yuan is originally from Shanghai and now lives in New York. She is a Certified Passive House Consultant and works on sustainable building consulting. She believes that technology helps people and the environment if it is being used mindfully.