The Home Appliance Business in the Internet Era
Date: Wednesday , August 17, 2016
Haier (HKSE: 1169.HK) is a Chinese multinational consumer electronics and home appliances company that designs, develops, manufactures and sells products like mobiles, computers, ACs, television sets, microwave ovens, refrigerators, washing machines and many others. The company has a current market capital of $38.63 Billion.
\"The Internet is so big, so powerful and pointless that for some people, it is a complete substitute for life\" - Andrew Brown.
We can safely say that the entire Indian sub-continent is undergoing a mass transformation of sorts, and internet and technology is playing a huge role in defining what role the so-called \'transformation\' will play in an average Indian\'s life. With a reported annual GDP growth rate of 7.5 percent (highest in the world), looking ahead, we are all set for a burgeoning, unprecedented expansion, given that the government policies and rules are implemented by all of us in both letter and spirit.
In a population of roughly 1.3 Billion, India is standing at the cusp of a huge growth and development story we are about to write. According to a study by IBEF, India is set to become the largest consumer durables market by 2015. This means that in less than 10 years, India will be eying a pie in the consumer durable market worth $12.5 Billion. So why are we eyeing optimism with so much positivity? The reasons would be:
- Higher levels of income in both urban and rural areas.
- Ease in paying taxes.
- Growth of a web based economy.
- Growing urbanization.
- Improvement of the average quality of life.
- Awareness of good and lifestyle improvement products.
- Improved affordability of durables.
- Increased innovation keeping India and Indians in mind and not just a copy paste of a technology suitable to a specific audience.
- Rise of the e-Commerce industry by leaps and bounds.
- Growth in organized retail.
- Disparity in Primary Sales (First Time Buyers) and Secondary Sales (Upgrade Market).
So what are the numbers that should back our claim around the growth?
1) The Consumer durables market is set to expand at the CAGR of 14.8 percent to $12.5 Billion in FY15 from merely $7.3 Billion in FY12.
2) As per CRISIL, the online retail market is set to grow by up to $8.08 Billion.
3) India is presently the largest Consumer Electronics market in the world and third largest country in the television sales.
4) Consumer giants such as Samsung, Sony, LG and Haier have pledged to manufacture or expand in India.
5) The Government has eased investment protocols and allowed 100 percent FDI in electronics hardware.
6) There is 51 percent FDI in multi brand retail sector.
7) India is among the TOP 5 countries to host startups; by 2020, there would be 10,000 startups,rising from the current count of 3,000, according to NASSCOM.
8) Poor penetration of consumer durables goods compared with global and average.
9) Adaptability of smart homes in India is increasing at 15-18 percent in tier-I cities and between 5-10 percent in tier-II and tier-III cities.
The Future of Smart Homes in India
Having a smart home was a privilege of the rich, now no more. The only purpose of creating smart homes or Smart Cities is to save TIME, MONEY and ENERGY, and all the innovation is happening around this value. The purpose of having a smart home is to turn our daily living a bit more comfortable, convenient, be secure, entertaining and sustainable as well. A smart home is powered by gadgets and computing technologies, and typically equipped with specially designed and/or structured wiring that enables its occupants to control (remotely) a large set of automated home electronic devices by simply entering a command. Among the top focus for an Indian house to make a smart home is electronically enabled lighting systems, fire detection systems, gas leakage detection, energy efficiency monitoring, entertainment systems and more.
A smart city/zone is expected to predominantly take care of Healthcare, Public Services, Smart Commercial Buildings, Smart Homes and Utilities. The biggest gainer in the complete Smart Home business would be \'Smart Commercial Buildings\', according to a 2015 study conducted by Gartner. \"Smart commercial buildings will be the highest user of Internet of Things (IoT) until 2017, after which smart homes will take the lead with just over one billion connected things in 2018,\" proclaims Bettina Tratz-Ryan, Research VP, Gartner. The impact of creating Smart City space will be mostly seen in industrial zones, office parks, shopping malls, airports and seaports. Also, IoT (Internet of Things) should be able to reduce the cost of energy, spatial management and building maintenance by up to 30 percent.
With a focus turning sharply to create residential spaces that has appliances, effective lighting systems, heating, air conditioning, TVs, computers, entertainment audio & video systems, security and camera systems, these devices have the capability of communicating with each other at the same time and be remotely controlled from any place with the help of a telephone or internet. We can only hope big and bigger in years to come.