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Leading appliance maker transforms into IoT Ecosystem of smart solutions

Leading appliance maker transforms into IoT Ecosystem of smart solutions

5G research investment advances innovation and global strategy

Li Huagang

CMO

Haier Smart Home

Li Huagang is CMO of Haier Smart Home, a leading global maker of appliances that has transformed into an Internet of Things ecosystem, creating smart solutions for the whole house to improve people’s lives with greater convenience and peace of mind.

COMPANY BACKGROUND AND VISION

Why did Haier decide to transform from a home appliances maker brand to an ecosystem brand and a leader in the Internet of Things?

The main reason for our transformation is the change in user demand. Users in the past might just need a product, but today they want a solution. Before, when we sold products to our users, the transaction was basically over. Today, the sale of products is just the beginning of a relationship that also includes services. Haier is already a global home appliance brand. We intend to build on that leadership. Nowadays, in addition to making appliances, we are developing as an ecosystem brand. As an ecosystem brand, we will be user centered instead of product centered.

In what other ways will the Haier ecosystem respond to people’s needs and wants and make a greater impact on their lives?

Three factors characterize our ecosystem. First, our Haier Smart Home solutions are focused on the emotional connection with consumers. Second, our solutions are user driven. Third, the Haier Smart Home is an open platform. Take IoC (Internet of Clothing), for example. We continue to make high quality and smart washing machines and dryers, but we are using our knowledge to improve the experience of doing laundry. By understanding the user’s needs, we can respond with complete solutions for cleaning and caring for clothing. We provide these solutions by collaborating with brand partners from many different industries. Haier benefits, not just by selling washing machine hardware, but also by being able to satisfy the requirements of our consumers’ scenario. Our partners also benefit from this ecosystem. And, ultimately, our consumers benefit from more comprehensive and customized smart home solutions.

What organizational changes is Haier making to attract people with the skills and talents required by the new ecosystem?

We are restructuring R&D, marketing and sales, and services. First, on the research side, Haier always has had talented product engineers. Today, however, our engineers work as part of teams that create complete solutions for the kitchen, bedroom, bathroom, and other key areas of the home. Second, our marketing and sales mentality has changed from pushing products on consumers to offering smart home solutions. In the past, our salespeople had great technical knowledge. Today, we have sales teams that understand consumer needs and design the best combination of solutions and services to meet those needs. The third change is service. In the past, service was about after-sales repairs. Today's service is system-wide, from purchase to design, production, delivery, and acknowledgement of later-use requirements.

How important is 5G to the future of Haier Smart Home?

We believe that 5G is critical, and we have invested in the R&D necessary for market-leading innovations. Haier Smart Home established the world's first 5G smart home laboratory. The investment includes a 5G industrial park where we are developing home solutions. The first group of intelligent home appliances and scenario solutions using 5G technology were rolled out in the second half of 2019. Among those products was our 5G Internet of Things central air conditioning system.

GOING GLOBAL, GOING DEEP

Is Haier Smart Home a global strategy?

Yes, we believe that with the advent of smart 5G, connectivity potential will expand dramatically. Therefore, this must be a global strategy, not just a China strategy. Our overseas brands will not change their names to Haier Smart Home. Rather, Haier Smart Home is the platform that all the overseas brands will use. Along with Haier, Casarte, and Leader in China, our Haier Smart Home brands are GE Appliances in the US; Fisher & Paykel in Australia and New Zealand; AQUA in Japan; and Candy in Italy. We started the strategy in China, in Shanghai, and will rapidly replicate and promote it throughout China and then outside of China. Expanding the concept overseas takes longer because it is more complicated in other countries. We have begun a pilot project in the US and will expand it in 2020.

According to BrandZ analysis, Haier is a leader among Chinese brands building business overseas. How has Haier’s overseas experience informed its initiatives in China?

Our overseas brands are very important for the Chinese market. Haier Smart Home is a high-end suite of products and services. Its success depends on delivering quality solutions for the whole home. Our overseas brands provide access to important R&D and service solutions. For example, the technology of GE Appliances, Fisher& Paykel, and AQUA helped us develop Casarte, our premium brand in China.

What particular strengths does Haier, as a Chinese brand, contribute to the development of its overseas brands?

The most important contribution we bring is speed—speed of innovation and meeting users’ needs. Breaking old rules and procedures, we leverage the excellence of our overseas brands with speed, which improves results. We also provide the Haier Smart Home platform, which we have developed over 13 years. This platform helps our overseas brands shift quickly, with minimal investment, from only selling products to becoming ecosystems selling scenario solutions that are relevant to their local markets.

Will the Haier Smart Home focus in China be in upper tier cities alone, or will you build business throughout the country?

Consumption upgrade is a trend throughout China, and we do not expect an affordability problem. We will promote in Tier 1 and lower tier cities. Haier Smart Home is a breakthrough that adds vitality to the home appliance category, with new possibilities for building sales and margins. Haier solutions deliver new benefits to the consumer, enhance the brand experience, and build loyalty, which maximizes the value of the consumer to Haier.

BRAND BUILDING AND MARKETING

Have you changed brand communication to match the brand transformation?

To educate our consumers about new possibilities for their homes, we opened our first physical showroom in Shanghai. Called the Haier Smart Home Experience Center, we will open locations throughout China. At these locations we have many room settings to demonstrate our appliances and to present other services and home products. We can demonstrate how to increase the functionality of a smart balcony, for example. The smart balcony can be another room for home appliances, such as a washing machine and dryer. It can have an automated clothes hanger for air drying. This combination forms an ecosystem to fulfill the requirements of the users’ scenario. A balcony can also be a place for using fitness equipment or doing gardening.

In what other ways has your traditional approach to brand marketing changed?

We used to concentrate on traditional mass marketing, which has its value, but it is not the best approach in this social media era. Today, we engage consumers with relevant content and try to be part of the conversation by creating and participating in circles of interest. In this approach, we both communicate to our users and listen to their comments, which helps us improve our senarios and services and make them more relevant.

How is Haier adjusting to China’s changing demographics, particularly the growing influence and purchasing power of young people?

Young people are a large market of potential consumers. Because they are so active in social media, it is important to reach young people by participating in social media groups. Their social circles influence their brand choices and purchasing habits. Some young people will buy Haier products to meet a group’s expectations; others will buy Haier products as a means of self-expression, to distinguish themselves within a group. That is why we provide personalized solutions that are move fashionable and different.

Is Haier also appealing to the growing number of Chinese seniors?

Haier has two key advantages that appeal to consumers at both ends of the age spectrum. For older users it is important that the products and solutions are not complicated. They must make life easier, not harder. The second is ease of use. Our voice recognition simplifies the use of our products.

Chinese consumers are seeking premium products and services of high quality. How is Haier meeting this need?

Starting with the user, we try to understand what innovative products and services can make life simpler and more convenient. Then we invest in the technology to develop the highest quality products. We’ll start with a particular scenario—a person arrives home after a long day at work, for example. Then we’ll imagine what smart home solutions could make that moment simpler, less stressful, and more enjoyable. Our smart solutions include technology to play music, open the curtains, tune the TV to a favorite channel, program the refrigerator screen to recommend a healthy meal menu, set the oven to the correct temperature, and coordinate the air conditioner, dehumidifier, and fresh air systems. To help our user return to work well rested, our pillow detects the changes in the depth of sleep over the course of the night.

How do you persuade consumers to invest in this level of innovation and quality?

Haier Smart Home offers several important benefits. First, products and services can be customized to the user’s needs today. Second, because those needs will change, the solutions can be iteratively upgraded. This is a lifelong service and experience guarantee, which is important in the rapidly changing world of technology. It means that no matter how many years pass, the technology will be up to date and the products and services will be relevant to the user’s life.