A growing number of Chinese manufacturers are making their way into the Japanese market for home appliances. Hisense Group established a research and development base in Japan and started selling products that were designed according to its own standards there. In Japan, Chinese home appliances used to focus only on low prices, but now they manufacture products for young people who are relatively weak in Japanese manufacturers, thus opening a hole in the monopoly market, and their products have begun to be placed in prominent positions in Japanese mass retailers.
When you enter the headquarters of Hisense Japan, which is located in Kawasaki City, you will be greeted by a variety of home appliances that have been arranged in an orderly fashion. In addition to televisions, air conditioners, and large-sized refrigerators, the most recent home appliances, such as the laser-using projector known as “Laser TV,” which was released by the Chinese head office at the 2022 American home appliance exhibition known as “CES,” are also on display here.
Hisense has widened its focus on major home appliances, such as televisions, refrigerators, washing machines, and air conditioners, in response to the trend among Japanese manufacturers to divest and sell businesses related to home appliances. A salesperson for an electricity retailer reported that some customers had suggested that, given that Hisense was already purchased for the purchase of the refrigerator, Hisense should also be purchased for the purchase of the television.
Washing machines with front-loading mechanisms will also be made available in Japan.
The market share held by Hisense is another indicator of the company’s presence. In 2021, Hisense will have a 12.9% share of TV sales in Japan, putting them in fifth place (Euromonitor International survey data). The gap between it and the first-place Sharp is only about 9 percentage points wide. In 2017, Hisense held only a 2.4% share of the market.
According to Li Wenli, President of Hisense Japan, Japan is the most demanding market in the world in terms of quality, and development that satisfies Japanese standards and global-scale procurement and production are perfectly combined in this country. Hisense has expanded its business to the rest of the world, built a network for the production of low-priced products and a network for the procurement of low-priced parts, and has continued to provide low-priced products. China is a huge market for electronics, but Hisense has also expanded its business there.
Hisense has continued to maintain this competitive advantage while simultaneously enhancing the functionality and quality of its products. In 2018, the business made the acquisition of Toshiba Imaging Solutions Corporation, which is now known as TVS REGZA, in order to jointly develop an imaging engine. Hisense has obtained image quality that meets Japanese standards, while REGZA has used Hisense’s procurement network to reduce costs. In addition to televisions manufactured under the “Toshiba” brand, the market share of the Hisense brand is also growing.
Hisense established a “Advanced Development Technology Center” in the city of Kawasaki in 2021 with the intention of fostering the development of white goods conforming to Japanese standards. The air conditioner that meets the standards of Japan and comes equipped with ventilation and a cleaning function for heat exchangers has been released. Despite having a higher number of features, the actual price is forty percent less than what Japanese manufacturers charge for products with an equivalent level of performance. In a buoyant tone, Li Wenli expressed that she is still giving serious thought to the possibility of using a front-loading washing machine, which are extremely common in Japan.
The expansion of Hisense’s domestic sales in Japan is not the only reason the company is concentrating on the Japanese market. The President of Hisense Group, Li Wenli, stated that in accordance with the stringent quality requirements of Japanese standards, Hisense Group has improved the overall quality of its products. The contribution of Japanese companies to Hisense’s total global sales is still relatively low; however, their importance to the group as a whole is comparable to that of the United States and Europe.
Hisense Japan came up with the concept of integrating internet of things (IoT) capabilities into its own products, with the television serving as the central hub, and linking various home appliances to the network. Although Japanese manufacturers have expressed interest in providing this service in the past, no business has yet taken the initiative to do so.
“Chinese manufacturers have been able to provide more advanced networking functions and artificial intelligence (AI) functions than large Japanese companies,” said Taro Yamato, an analyst at Euromonitor International, pointing out that the technical strength of Chinese home appliances is improving. In addition, “Chinese manufacturers have been able to provide more advanced networking functions and artificial intelligence (AI) functions than large Japanese companies.” Home appliances made in China and sold in countries other than Japan include refrigerators that provide recipe suggestions based on the contents of the refrigerator and washing machines that are connected to machines that provide solutions for matching clothes. Other examples of these types of products include washing machines. Even though home appliances are considered to be mature products in Japan, manufacturers there are still developing game-changing additions to existing models.
Projector share comes second
Additionally, there are Chinese manufacturers in Japan that are responsible for the production of one-of-a-kind goods, and their influence is steadily expanding. Nebula is a lightweight and portable home projector that Anker is marketing and selling in the Japanese market. Android TV, the base operating system from Google, which offers support for the most popular video streaming services when installed.
The survey company BCN (Chiyoda-ku, Tokyo) predicts that the Japanese market share of Anker projectors will be 14.8% in 2021, ranking second. This ranking has risen significantly from third place the previous year, when it was predicted that the Japanese market share of Anker projectors would be 14.8%. Since it is possible to watch movies on a large screen even when there is no television present, it is popular among younger people who do not watch television programs, etc.
Apple holds a dominant position in the smartwatch market in the United States, while domestic companies in Japan have a very limited presence. However, Chinese companies such as Xiaomi and Huawei Technologies have made significant headway in this market. The battery that comes included in Huawei’s smartwatch is designed to last for up to two weeks without needing to be recharged. The “Apple Watch Ultra” that was released in September by Apple only had a standby time of 36 hours. This model has a longer standby time.
In spite of the success of Chinese businesses, there are still roadblocks to the widespread use of their products. Analyst at Euromonitor Taro Yamato made the following observation: “Japan’s domestic beliefs are deeply rooted in the elderly and high-end white goods.” Sometimes, even if the function is not inferior, the products of Chinese manufacturers are excluded from the purchase choice due to the popularity of the products from other countries.
Consumers in Japan may also be bothered by the fact that the data collected by Hisense’s envisioned Internet of Things home appliances will be processed by businesses located outside of Japan. The Japanese market presents significant difficulties for Chinese manufacturers in terms of both the quality of their products and the development of their brands.
The Japanese home appliance industry needs to advance to the next level.
Even though Japanese companies continue to lead the pack in terms of domestic sales share in Japan, Chinese companies that specialize in home appliances have experienced rapid growth in recent years. Japanese domestic manufacturers have further shifted their focus to products with high value-added in order to compete with the competitively priced and functionally advanced goods produced by Chinese companies. However, the majority of opinions hold that improvements in hardware functions will, on their own, catch up to software capabilities at some point in the future, despite the fact that there are limitations.
White goods, which are considered to be necessities of life, reap the benefits of an aging population and an increase in the number of households with two income earners. Additionally, the number of high-priced models is growing, and the supply of white goods has been maintained despite Japan’s ongoing population decline. The supply of white goods is expected to reach 2.5214 trillion yen in 2021, up from 2.2116 trillion yen in 2000, according to statistics provided by the Japan Electrical Machinery Industry Association (JEMA).
White goods are the primary focus of Japanese businesses as they seek to develop products with high unit prices. Taking the rice cooker as an example, it not only features functions like adjusting the firepower according to the brand of rice, but it also promotes strategies like cooperation with well-known Japanese restaurants. These features and more can be found on the rice cooker. Increases in sales can be seen in categories such as front-loading washing machines and large refrigerators.
However, because Japanese manufacturers are concentrating on producing expensive models, the product’s popularity is waning, particularly among younger people who have different priorities in life. A survey that was conducted by Panasonic Holdings in 2021 found that only 53% of young people in their 20s who responded “know the Panasonic brand.” This represents a decrease of 29 percentage points from the survey that was conducted in 2016. It is said that not only are Japanese manufacturers withdrawing from the production of products that are directly relevant to the lives of young people, such as smartphones, but that Chinese companies are also dominating the market for products available at low prices. Large-scale integrated electronics companies in Japan have, for a considerable amount of time, been unable to escape the attention of Japan’s various manufacturers.
On the other hand, the young Japanese company Balmuda, which specializes in home appliances, is expanding its presence in the market by utilizing a method of product manufacturing that is distinct from the approach taken by large companies. The oven has a straightforward design, and despite the fact that it can cost as much as about 20,000 yen, more than 1.5 million units will have been sold by the time the year 2021 comes to a close. The oven’s primary focus is on producing exceptional bread. In September of 2022, additional functions were implemented, and a model with a price point of approximately 30,000 yen was introduced.
If it goes beyond a certain level, then it will diverge from what consumers want, which will result in “continuous innovation,” which is the continuous improvement of functions. When that time comes, once the products that have simple functions and are easy to use come out on the market, customers will quickly flock to the simple products.
Integration with network services is one of the potential avenues that can be pursued in order to improve usability without jeopardizing one’s ability to compete favorably in terms of product performance. In order to increase its overall revenue, Sony is currently expanding into new markets, such as the home appliance and video game console markets.
The Japan Electrical Machinery Industry Association compiled a proposal for the subscription service of home appliances for Japanese-funded home appliance companies in February 2022. The proposal was presented to the Japanese government. We collect and analyze the usage of consumers’ home appliances through the use of the internet, and we envision a business that advises companies to switch to necessary home appliances. Our target demographic is the young class, which includes renters and other consumers. Japanese companies that manufacture home appliances need to up their game if they are going to compete successfully with Chinese companies.