Since China's accession to the WTO, the tide of the market economy has allowed imported brands to reap the dividends of the times. A.O. Smith is the first foreign-funded enterprise to increase its capital in China after China's formal accession to the WTO, and is also a beneficiary of this round of economic tide. Since 2001, the company has also been at the top of China's water heater industry for many years.
But with the development of technology in China's local home appliance companies, the myth of century-old A.O. Smith in China is disintegrating. According to Aowei data statistics, from January to October 2021, A.O. Smith's market share in China's gas water heater and electric water heater market has fallen out of the top three, the market share of online sales caliber statistics is 3.13%, down 0.53% year-on-year, and the market share of offline sales caliber statistics is 10.37%, down 0.49% year-on-year, ranking below Haier, Midea, Wanhe.
In fact, after the tide faded, A.O. Smith showed a decline. In order to boost the market share in China, A.O. Smith began to attack from multiple angles and brands in China, and officially proposed the concept of AI-LINK fully controlled intelligent IoT system in April 2021, hoping to bring new smart home changes through the whole ecosystem, so as to occupy a larger market share.
What constraints will A.O. Smith, whose brand advantages are gradually losing, focus on the AI-LINK intelligent whole ecosystem, face?
National values reshape the rise of local brands
In the Chinese market, A.O. Smith has always been known for its high-end image. In the past, domestic technology was relatively backward compared with Western developed countries, so it also caused a "weak mentality". As soon as the people see the American brand, they will preconceived that the technology and quality of A.O. Smith products are very good.
However, with the continuous improvement of the core technology of Chinese enterprises and the increasing sense of national pride, this backward value of "foreign moon is rounder" has gradually weakened. In particular, young people who have witnessed the rapid rise of China's national strength have gradually grown into the backbone of consumption. In particular, the national tide brand has risen rapidly with the reshaping of values, and the public's enthusiasm for domestic brands has greatly increased.
In recent years, we have also seen that many domestic brands have come to the fore and pressed A.O. Smith. For example, domestic brands such as Haier, Midea, and Wanhe directly dominate the top three in the domestic home appliance market.
In fact, the decline in A.O. Smith's market share is the result of resonance for many reasons.
The first is the improvement of domestic home appliance brand technology, which has surpassed foreign brands. After more than ten years of improvement and precipitation, the technology of domestic home appliance brands has been inferior or even surpassed by foreign brands. The leading enterprises Haier, Midea, Wanhe and so on are even better. According to the financial reports of Haier, Midea and A.O. Smith, it can be seen that the operating income of Midea and Haier has far exceeded that of A.O. Smith, and behind it, domestic brands have become more and more popular.
The second is the enhancement of the consumption concept of national brands. At the beginning of the 21st century, A.O. Smith accurately grasped people's psychological habit of "high price corresponding to high quality", with the help of the communication power of advertising, vigorously placed advertisements in prime time, with the sentence "Do you also want to wash half a century?" The slogan successfully opened up the domestic consumer market.
With the rise of Chinese brands, consumers are more rational and pay more attention to user experience and scene ecology. Foreign brands can no longer rely on their status as foreign brands to get extra points in the minds of consumers. Moreover, in the home appliance market with serious product homogenization, the price of A.O. Smith is often one to two times more expensive than That of Haier and Midea, which also leads to the decline in A.O. Smith's market share.
The third is that Chinese brands have brought core technologies to the world, and global consumers have begun to recognize Chinese brands.
With Haier and other Chinese home appliances going global with their own brands, the sales of white electricity have ranked first in the world for many years, especially after killing a bloody road in the European and American markets with their own brands, the national values have improved significantly. In the past, the phenomenon that foreign brands are symbols of identity and quality is weakening, and instead of domestic brands expanding their market share, it is the essential change in consumer values. In this context, the brand advantage of the centennial myth A.0. Smith is slowly disappearing.
Why is it difficult to develop the AI-LINK ecosystem?
Faced with a gradual decline in market share, A.O. Smith began to adjust his strategy and shifted his focus to the construction of smart homes. I have to say that A.O. Smith's vision is unique and precise!
With the development of 5G technology, consumers have higher and higher requirements for the level of intelligence of home devices in daily life, and are no longer satisfied with connecting and controlling home appliances such as air conditioners, TVs, and water heaters through mobile phones, but hope to have a systematic integrated ecosystem to achieve whole-house intelligence and create a home that understands consumers.
Therefore, in 2021, A.O. Smith began to fully develop the collaboration and interoperability of "cold, warm, wind and water" products to create an AI-LINK fully controlled intelligent IoT system. It is understood that the system took the lead in applying the mature IoT solution of industry and commerce in the home scene, and realized the person-centered user experience. A.O. Smith's blueprint is desirable, but the road to the ideal may be difficult!
The first is the island problem in the field of smart homes. Now the consumer's home appliance brands are diverse, so that these terminals on a platform running is quite difficult, the need for a professional integration company to make these home appliances according to the best program to achieve intelligent, integrated, systematic operation, rather than let people as the control of the terminal.
To this end, A.O. Smith launched the AI-LINK system, which is to control each device through the intelligent operation system to achieve the effect of whole house intelligence. However, now that the competition in the home appliance market is very fierce, what is the attractiveness of the A.O. Smith AI-LINK system?
You must know that ecology is now king, and an Android system will eat most of the dividends of the smartphone application market. Whether Midea, Haier, Gree, Hisense and other giants can easily agree to centralized access to the AI-LINK system is still unknown. If these giants move closer to the AI-LINK system, it is tantamount to agreeing to give up most of the dividends and be subject to others from then on. This is obviously difficult for domestic brands to accept.
Therefore, A.O. Smith's AI-LINK system is destined to sing only one-man shows. Moreover, more than 100 intelligent terminal manufacturers such as Midea, Gree, and Haier have become partners of Huawei's Hongmeng ALT ecosystem, and in the face of Huawei's strong research and development capabilities, what are the odds of A.O. Smith?
Secondly, A.O. Smith's current product category is relatively single. Its products are mainly concentrated in water heaters, water purifiers, air purifiers and other products, and it is difficult to form a complete application ecosystem. With the basic completion of 5G construction and the era of Internet of Everything coming, there is not much time left for A.O. Smith to build a complete ecosystem!
epilogue
The A.O. Smith Centennial Myth may become a thing of the past. With the reshaping of national values, its brand advantage is gradually lost! In order to restore the glory of the past, A.O. Smith has focused on the field of smart homes, trying to build a whole ecosystem.
However, its product category is single, which cannot solve the "island" problem of smart home. And the AI-LINK ecosystem will also face competition from Huawei's Hongmeng system with more than 100 partners. Therefore, it is foreseeable that the market it faces in the future is destined to be difficult. Hopefully, time will pass and A.O. Smith will find a breakthrough to recreate the glory days of yesteryear.
Resources:
"Empowering the Industry's New Momentum 2021 Smart Energy-saving Building and Digital Application Industry Development Forum" was grandly held, Baidu Encyclopedia
This article is originally based on Blue Technology Unauthorized any website and platform shall not be reproduced Infringement will be investigated.