Source: CHEAA-run China Appliance magazine

Electric vacuum cleaning appliances grow against the headwinds amid the pandemic and fierce market competition, posting strong performance for 2021. It’s worth noting that Roborock achieved a frog leap in 2021 with an increased R&D investment and Ecovacs saw its sales touch the 10 billion RMB milestone for the first time thanks to its dual-brand strategy. In this context, where is the industry going?

Fast-growing momentum

Electric vacuum cleaning appliance industry maintains its fast-growing momentum in 2021, posting omnichannel retail sales value of 30.9 billion RMB, up 28.9% YoY, and omnichannel retail sales volume of 29.8 million units, up 2.6% YoY, according to All View Cloud.

Roborock, Ecovacs, Mi and Narwal are key players of the domestic market and iRobot, Ecovacs, Shark and Eufy are key players that have entered the global market. From the released finical reports of these renowned brands, some highlights are noticed.

Ecovacs successfully deepened its “Ecovacs+Tineco” dual-brand strategy with the rollout of many popular home service robots and high-end smart appliances in the global market and achieved a fast growth in both brands after successfully established its Tineco brand, according to the company’s financial report for 2021. It posted revenue of 13.086 billion RMB for 2021, up 80.90% YoY, and net profit of 2.01 billion RMB, up 213.51% YoY, of which the growth rates of revenue for Ecovacs and Tineco are 58.42% YoY and 307.97% YoY respectively, according to the company’s financial report for 2021.

The company’s own brands took a significantly larger share by revenue. The sales revenue of home service robots under the Ecovacs brand came to 6.71 billion RMB, accounting for 51.28% of the company’s total revenue, while that under the Tineco brand 5.137 billion RMB, accounting for 39.25%. The two brands took a combined share of 90.53% of the company’s total revenue, up 14.57% from the 75.96% of last year.

Roborock’s key performance indicators stay strong according to its performance report released on April 22, 2022. During the reporting period, it achieved revenue of 5.837 billion RMB, up 28.84% YoY, and net profit 1.402 billion RMB, up 2.41% YoY. The compound growth rate of the revenue for the past five years was 84%. The report credits the rise to its position as a leading player of the field and its flexible strategy in the complicated industry environment.

Optimized product mix

With a fast growth of revenue, enterprises put weight on the optimization of product mix.

(1) Product differentiation. Apart from the steady operation of the floor cleaning robot line, Ecovacs made a breakthrough in new lines such as window cleaning robots and air purifying robots whose combined revenue accounted for 10.9% of the company’s domestic revenue from home service robots, up 2.4% YoY. Plus, it stretched itself into the commercial cleaning robot field. Tineco has established an eco system that covers smart home cleaning, smart cooking, smart personal care and smart healthy life. Roborock is also deploying commercial cleaning robot line to get a head start apart from its rollout of next generation cleaning robots.

(2) High-end market expansion. With products getting homogeneous in the low-end market, the development of high-end market and high-end products become a major concern of enterprises. Self-cleaning products including products with a clean base gained traction fast as they well target the pain points of consumers.

Ecovacs is going high-end. Its revenue from self-cleaning products accounted for 54.7% of its total revenue from vacuum cleaning robots sold in the domestic market. Ecovacs says it has taken a leading position in high-end market and it is deploying online and offline channels to consolidate its position.

(3) Global expansion. Global expansion has always been a key strategy of Ecovacs. After years of investment and establishment, Ecovacs has built a global operation network with the United States, Germany and Japan as the key markets, established both online and offline sales channels and have received broad recognition from global consumers due to its continued investments in brand building.

Tineco saw a significant rise of brand recognition and brand influence at overseas markets after three years of global expansion. The financial report unveils a 60.26% rise YoY of overseas revenue from Ecovacs and a 180.65% rise YoY from Tineco, accounting for 30.91% and 31.66% of each brand’s total revenue respectively.

Roborock keeps its focus on markets including the United States, Europe and South Asia. It has established a global distribution network that covers countries and regions where it has built its business and those with large demands but have not been tapped. Plus, it is setting up local subsidiaries and overseas companies to offer better service. It is learned that Roborock has overseas companies in the United States, Japan, the Netherlands, Poland, Germany and South Korea, and has won broad recognition of consumers thanks to its continued brand building efforts.

Technical R&D

The fast iteration of products cannot be made without the longtime investment in R&D.

Ecovacs invested 0.549 billion RMB in R&D in 2021, up 62.45% YoY, according to its financial report. Ecovacs keeps its R&D focus on three-dimensional understanding, interaction and AI algorithm, while Tineco on the establishment of a brand new IoT-powered user ecology that covers multiple categories. Apart from floor cleaning technology, Tineco is building a diversified algorithm model based on its technology on the perception of environment such as smell, skin, water and air.

With its own supply chains and its manufacturing strength, Ecovacs has developed an independent chain that covers motor, battery and core components, which allows the company to keep a high efficiency in R&D and innovation and support the R&D with the data collected.

The R&D is also a key area of focus of Roborock. It invested 0.441 billion RMB into the R&D in 2021, up 67.74% YoY, according to its financial report. As of the end of the reporting period, it has 555 R&D staff, up 45.29% YoY. Roborock is stepping up its efforts in new product R&D to improve the competitiveness of its products.

Outlook

As to the plan for next stage, Ecovacs will continue its technical innovation to expand product lines and improve product performance, and step up its establishment of overseas channels and the expansion of sales territories to cushion the influence of possible changes in macro environment, slower economic growth or economic fluctuations on any single markets. Roborock will keep its market-oriented strategy, and improve its marketing capability, strengthen technical support, expand domestic and international markets to improve profitability. Plus, it will maintain its dedication in the R&D of core technologies such as AI, navigation algorithm and new sensors, and expand its talent pool to consolidate its leading position in technology.

It’s worth noting that the Q1 performance of vacuum cleaning appliances stays strong. Facing intensified market competition, the updated product mix and technical R&D lay the ground for future competition. The future of the industry is expected to be promising.