Image source @ Visual China
Text | Giant Tide WAVE, author | Jingyu
You may not know Company Nine, but you've definitely seen a balance car.
In this field, No. 9 Company is the most well-known enterprise in China and has also become a global leader.
In 2015, after only three years of founding, Nine took over Segway, the 15-year-old industry's progenitor, an American company co-invested by Jobs and Bezos.
Since then, Nine has expanded and eventually achieved the world's largest market share of counterbalance vehicles, with a user network of more than 220 countries around the world.
After gaining a global leading position on the balance car, the avant-garde, stylish, geeky company has begun to focus its new business on two-wheeled electric vehicles in the past two years.
Yes, it is a two-wheeled electric vehicle that can be seen everywhere in the urban-rural junction and the third, fourth, and fifth-tier cities, but it is forbidden to go on the road in many large cities. It is very different from the product style and audience of the balance car.
No. 9 has been in this field for two years, and electric two-wheelers have become its third largest business segment after balance cars and scooters. But at present, this market is still surrounded by a number of traditional brands, such as Yadi, Emma, Xinri, Andial, and the channel is also very sinking.
Therefore, this strategic layout of No. 9 Company has also puzzled some market participants.
Why would No. 9 Company, once a model of a company going to sea and occupying the patent premises, bet on somewhat inconspicuous two-wheeled electric vehicles? In the continuous layout of new business, can Company Nine still maintain its technological crushing advantage as always? This is the question this article is trying to answer.
01 The "Nine Posture" of Chinese Enterprises Going to Sea
Acquiring foreign industry originators and ultimately mastering the right to set international standards in the industry is extremely rare in the history of Chinese enterprises going to sea.
Nine's most remarkable history is its 2015 investment in the U.S. company Segway, which many commentators believe set a precedent for Chinese companies to go overseas to acquire.
In 2012, the company was established, with reference to Segway, relying on China's mature manufacturing capabilities, in 2013, the balance car was reduced by a quarter of its weight, the price was only 10,000 yuan, and the sales volume of 200 million yuan and the following year were achieved.
But after entering the overseas market, No. 9 encountered Segway's patent barriers. In September 2014, Segway filed a lawsuit against several Chinese balance car manufacturers, alleging that the latter infringed multiple patented designs. That year, Amazon, the largest e-commerce company in the United States, removed all balance car products from China.
In the end, Company Nine chose to "solve the problem" by acquiring Segway. To this end, it has introduced two rounds of financing of over 100 million US dollars from investors such as Xiaomi, Shunwei, Sequoia China and Huashan Capital, and finally completed the acquisition.
After the acquisition of Segway, No. 9 Company successfully changed the price of the balance car from the earliest 30,000 to 3,000 pieces, which was widely welcomed worldwide, and the sales volume far exceeded the original Segway, becoming the industry first in the field of electric balance bikes in the world.
From a technology company based in China, it has gradually realized the global business layout, acquired the originator of the foreign industry, and finally mastered the international standard setting right of the industry, which is extremely rare in the history of Chinese enterprises going to sea.
For example, one of the core concepts of Anker Innovation, which has achieved the top of the overseas business, is to "beat the non-brand with a cost-effective brand", although Anker Innovation has made certain achievements in technology, but this achievement is far from the point of mastering the right to set standards. Its monopoly on various types of patented technologies is difficult to say the same as that of Company Nine.
No. 9 Company can be said to have successfully demonstrated the "No. 9 posture" of Chinese enterprises going to sea, not only defeating opponents with the low-cost advantage of Chinese manufacturing, but also winning victories in the field of intellectual property rights.
It is worth mentioning the role that Xiaomi plays in it. No. 9 Company originally had mature products, and Xiaomi mainly helped it improve efficiency and expand its scale, so it finally achieved the extreme price of a balance car priced at 1999 yuan.
Taking one of the main raw materials of the balance car battery as an example, Xiaomi's charging treasure sales are leading the world, and it consumes a lot of batteries every year, so it can get goods at a very low price, and even reach the lowest supply chain price, so it greatly reduces the price of the battery cell and helps the No. 9 balance car reduce the cost.
02 Niche market drawbacks loom
The market size of the balance car is still limited, and only some high-income people who are keen on new things are willing to pay for it.
Company Nine successfully merged Segway and became the dominant player in the balance car market. But although Company Nine has reduced the price to the extreme, it still has to face the inherent problem of "balance cars are a niche market".
Niche markets, also known as niche markets, mean that the industry is like a shrine, small in scale, and only one statue (enterprise) occupies the vast majority of space. The company itself has the living space, but there is not enough room for development.
This problem has been evident in the development of Segway. Jobs, who was involved in the investment in Segway in 2001, said that Segway is as innovative as a fascinating personal computer, and that it could rewrite the future of transportation, and I must be involved in this investment.
Jobs's vision ultimately failed. Until 2010, the total sales volume of balance bikes worldwide did not reach 100,000 units. Segway, which had a weak successor, had changed hands several times before selling it to Nine.
The same problem lies ahead of Company Nine.
Although no. 9 has made every effort to reduce the price of the balance car to 2,000 yuan, as a short-distance vehicle with limited use, its market size is still limited, and only some high-income people who are keen on new things are willing to pay for it.
Huang Chen, SVP and president of the Global Business Center of No. 9 Company, said in a speech in October 2021, "The strategy of No. 9 Company at this stage is to only do T1 and T2 cities in China, only 9 countries in Europe, 2 sunshine states in 50 states in the United States, 2 cities in Canada, and only 3 or 4 countries in Asia-Pacific. At the same time, the user portrait is also very clear, mainly male, middle class, age 20-40 years old, while covering their small children, 3-14 years old. ”
The existing technology also does not support Company Nine to further reduce costs significantly and thus expand the scale of the industry. Unless lithium batteries become very cheap, electric motors become very light, etc., there will be a huge breakthrough in industrial basic technology.
Because of this, No. 9 Company has launched a new category from 2016 - electric scooters.
Since then, with the sharing electric scooter war in the United States around 2018, the smart sharing scooter launched by No. 9 Company has received a large number of orders from travel companies such as Lime and Bird, supporting its second growth point.
The prospectus shows that in 2020, its electric scooters have exceeded the delivery of balance vehicles, and the revenue share of company Nine has reached 70%.
But this new growth point, which seems to be full of potential, also quickly suffered a bearish.
Due to the safety hazards of shared electric scooters, their launch in many markets around the world has gradually shrunk. At the end of 2019, a total of 223 cities in Europe and the United States offered shared electric scooters, and by March 2020, that number had been reduced to 177.
Obviously, shared electric scooters have also gradually encountered the bottleneck of the market, and most of the next demand belongs to the stock replacement of cyclical car replacement. In this context, Company Nine chose electric two-wheelers as its third growth point.
The market size of electric two-wheelers is naturally much larger than that of balance vehicles and electric scooters (the number of two-wheeled electric vehicles in China has reached 250 million units), but whether the advantages of No. 9 Company can continue in this market are still doubtful, and the core problem is whether the penetration of the sinking market can match the brand tone and corporate capabilities.
03 Where's the next blockbuster
Not every field where Nine can build technical exclusivity and patent barriers like a balance car.
In a situation where most of the main products are niche markets, Company Nine can easily hit the ceiling on a single category. Therefore, with its development, every few years to lay out and develop the next explosive product.
Gao Lufeng, chairman of No. 9 Company, told a number of media reporters, "The layout logic of No. 9 Company in the product track has three principles: one is that a certain category is about to usher in an outbreak, the second is that this category has the opportunity of subversive innovation, and the third is that the market pattern of this track is undecided, and No. 9 Company may grow into the world's first." ”
This logic is quite similar to Anker Innovation, which is also a leader in going to sea, and it is also looking for targets based on explosive products, so it constantly lays out new products.
But not every area, Nine can build technical exclusivity and patent barriers like the balance car. With its entry into one new subdivision after another and the resumption of R&D investment, the starting line between No. 9 and its rivals is not far behind.
It is reported that the secretary of the board of directors of no. 9 company explained in the research activities that the core concept of making electric two-wheelers and the previous products have many commonalities.
It is true that there are technologies that can be reused in terms of battery management systems (BMS), GPS anti-theft, system OTA, etc., but the most core and exclusive technologies are often difficult to reuse. Taking the layout of the scooter field as an example, the patents of more than 400 balance vehicles of no. 9 company cannot be reused in the field of scooters.
Reflected in the electric two-wheeler business, the gross profit margin of the ninth company's business in 2020 was only 18.26%, lower than the 27.12% of the balance car and scooter. Obviously, No. 9 has not been able to establish a technical monopoly in the field of two-wheeled electric vehicles. In other words, its technical characteristics are not enough to make it stand out from the competition and obtain excess profits.
In fact, the domestic two-wheeled electric vehicle market has almost stopped growing for many years, and there are many players, which can be called the Red Sea. However, under the implementation of the new national standard, it is expected to bring certain replacement needs, and there are structural opportunities.
Yadi is the leading enterprise in the two-wheel electric vehicle industry
But as mentioned earlier, in the two-wheeled electric vehicle "electric + intelligent" route, the starting line between The Ninth Company and the opponent is not far behind. In addition to the industry's intelligent pioneer calves, the traditional leader Yadi, the new player Hello Travel, etc., the industry has generally made efforts in the intelligent aspect of two-wheeled vehicles.
Especially for shared motorcycles, the business model of the industry is based on intelligence.
It is worth mentioning that the product style and audience of the two-wheeled electric vehicle of no. 9 company are very different from the balance car, so its channels are difficult to reuse. According to the data, as of May 2021, the number of its two-wheeled electric vehicle stores has exceeded 1200, and a large number of them are distributed in third-, fourth- and fifth-tier cities and counties. This also means massive capital expenditures.
04 Write at the end
On the eve of the listing, due to the fact that the proportion of robot business was less than 0.5%, which was inconsistent with the occupation, the Chinese name of Company 9 was renamed from "Robot 9" to "Company 9".
On December 3, 2020, Company 9 underwent its first post-IPO structural adjustment and formed a robot team consisting of four new departments: "AI and Robotics Research Institute", "Commercial Robotics Division", "Home Service Robot Division" and "Robot Mobile Platform Product Line".
From the name change and structural adjustment, we can see the ambition and unwillingness of the ninth company in the field of robotics.
The difference with the crushing advantage formed in the field of balance vehicles is that although no. 9 company has laid out a number of businesses such as personal service robots, carrier robots, and electric bicycles, only electric scooters have finally run out.
As its co-founder Wang Ye said, "several other directions have not yet succeeded." But innovation and excellent products will always be welcomed in the market, which is a truth that the business world will never go out of style.