Small household appliances turning into big business (small commodities and big industries ⑥) practitioners | products | commodities

A Glimpse of Cixi Small Home Appliance Intelligent Manufacturing Town. Provided by the Propaganda Department of the Cixi Municipal Committee

Yueri independent brand "Xiaoshi" hair dryer. Photo by reporter Ding Meidong

In the R & D workshop of Kadili Electric Co., Ltd., a R & D staff is testing the function of the coffee machine. Photo by Xinhua News Agency reporter Zhang Xiaojie

The staff assembled the water purifier in the workshop of Ding An Electric Co., Ltd. Photo by Xinhua News Agency reporter Zhang Xiaojie

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People from Cixi often say, "Manufacturing a small household appliance takes less than an hour to find all the components and complete assembly in Cixi."

There are over 2000 home appliance manufacturers and nearly 10000 supporting enterprises in Cixi, Zhejiang, with products covering over 20 series and thousands of varieties. In terms of production, Cixi produces and manufactures about 60% of the world's small household appliances, with a market size of 100 billion yuan. The production of multiple sub varieties such as electric irons, hair dryers, and electric heaters ranks first in the world.

How was Cixi, the world-class "capital of small household appliances" refined? How can the people of Cixi turn inconspicuous small household appliances into big businesses with a value of billions of yuan? Our reporter came to Cixi to explore the truth.

From small family workshops to a complete industrial chain

Although the small household appliance industry in Cixi is so prosperous today, before the reform and opening up, the local area was still mainly focused on agricultural production, and the economic and trade development was far from that of neighboring counties and cities.

In the 1980s, the government introduced policies to encourage rural areas to actively adjust their industrial structure. With this opportunity, a large number of township enterprises have sprung up like mushrooms all over the country. During this period, some Cixi people who ventured abroad returned to their hometowns to start businesses, and also brought back advanced skills from factories and workshops in other places. "At that time, we gathered many skilled personnel in accessory processing here, who could run businesses and do work. They established many workshops and factories in towns such as Zhouxiang to undertake the production and processing of home appliance plastics and hardware spare parts for large enterprises in Northeast China, Qingdao, Shanghai, and other places." said Xiong Guoquan, Secretary of the Yuncheng Village Party Branch in Zhouxiang Town, Cixi City.

After entering the 1990s, the number of small home appliance enterprises and practitioners in Cixi increased significantly. "Driven by the older generation of entrepreneurs, many newcomers have joined the small home appliance industry. Everyone gathered together to discuss how to make money and manufacture products, and 'starting a factory and starting a business' has become a trend," said Xiong Guoquan.

With the continuous expansion of business, the traditional family small workshop model of "front store and back factory" can no longer meet production needs. In order to seek long-term development, many spare parts enterprises have begun to expand and transform their business. Larger and more complex home appliance and machine enterprises are blooming everywhere in Cixi, operating product categories covering various fields such as household appliances, kitchen utensils, beauty and hairdressing appliances, etc. During this period, world "singles champions" such as Yueli and Zhuoli in the current small home appliance sub industry established and emerged.

Small home appliance practitioners in Cixi actively expand their business outward, and various international exhibitions such as the Canton Fair are important occasions for them to meet foreign businesses. With excellent product quality, Cixi small household appliances have received a wide range of "foreign orders" at the exhibition, becoming many international leading manufacturers and processors. As local enterprises continue to expand their overseas markets, Cixi has gradually grown into an important base for small home appliance procurement in the international market, and the world-class "Small Home Appliance Capital" has begun to take shape.

After more than 40 years of development, small household appliances have become a beautiful business card of Cixi and formed a sound industrial chain. Taking Yuncheng Village under the jurisdiction of Zhouxiang Town in Cixi City as an example, there are more than 200 enterprises engaged in the production and manufacturing of small household appliances in this village level administrative unit covering an area of 3.68 square kilometers, with an annual output value exceeding 2.5 billion yuan. The entire process of small home appliance manufacturing, from mold design and manufacturing to injection molding and spraying, from key component production to complete assembly and delivery, can be completed in Yuncheng Village in a one-stop manner.

"The location advantage of Cixi's small home appliance industry is obvious, which gives us local enterprises full competitiveness," said Li Lizhong, Director of the Marketing Center of Yueli Group Co., Ltd.

From imitation manufacturing to research and development innovation

With orders pouring in, the industrial scale of Cixi small home appliances continues to grow. However, in the early stages of the development of whole machine enterprises, many practitioners remained in the stage of imitating foreign brands, and their product lines were severely homogenized. For the sake of performance, some companies even adopt a "low-quality and low-priced" business model, causing relative market chaos.

How to overcome the "biased science" dilemma of large industrial scale and weak product lines? Some Cixi small home appliance practitioners believe that promoting product innovation through independent research and development is crucial.

"Since the last century, Zhuoli has chosen to pursue independent innovation." Xu Jianhui, the head of the Industrial Design Department of Zhuoli Electric Appliance Group Co., Ltd., told reporters that as the "global champion" with the highest production in the field of electric irons, Zhuoli has recently introduced a large number of professional R&D and design talents. "The previous model was that foreign companies provided us with product drawings and models, and we did 'replication' according to the book, which not only had low profits but also high labor costs. After the establishment of the R&D department, we accumulated technology and design, and began to build Zhuoli's own product line."

Xu Jianhui recalled the scene of attending the Cologne International Home Appliance Exhibition in Germany in 1999. As soon as Zhuoli's independently developed new electric iron made its debut, it attracted attention at the exhibition. The exquisite original design made many foreign merchants demand to sign contracts with Zhuoli on the spot, breaking the prejudice of the outside world that Chinese small home appliances would only imitate foreign product designs at that time. Now, Zhuoli has built a full chain of "production, research, and sales", and more than 200 engineers from the group launch hundreds of innovative products every year.

The process of research and innovation is not easy. Entering the R&D center of Ningbo Kaidili Electric Appliance Co., Ltd., a R&D personnel is operating the coffee machine in front of the platform, focusing on functional testing. According to him, even upgrading and updating a small feature requires months of repeated testing by the R&D team, with countless drawings and models drawn and built during this process.

With continuous investment in design and research and development, Kaidili has achieved continuous product innovation results. General Manager Hu Wei pointed to a coffee machine in front of him with over 30 patents, showcasing its innovative highlights to the reporter: the filter mesh reaches a density of 300 mesh, the coffee machine filter has more pressure, and the oil extraction is more complete; The sealing design of the coffee steam return coffee machine greatly enriches the taste of coffee. Hu Wei said, "Strengthening innovation, adhering to research and development, and continuously launching new products with high technological content are the secrets of Cadillac's ability to keep orders."

With the acceleration of independent innovation, many small home appliance enterprises in Cixi have achieved world leadership in product technology. Taking Ningbo Ding'an Electric Appliance Co., Ltd. as an example, as a company mainly engaged in water purifiers, its pioneering technology for pop-up filter cartridges has solved the industry's difficult problem of replacing filter cartridges in water purifiers.

Ding'an General Manager Xu Huajie told reporters that the company's independently developed product designs have been widely recognized by customers, and even foreign companies have approached him, hoping to "import" technology. "A customer from Türkiye took a fancy to our filter element and hoped to bring the relevant technology back to Türkiye. We set up a factory in Türkiye in a joint venture with the other party, which is also regarded as the" export "of Ding'an's filter element technology abroad." Xu Huajie said.

From OEM OEM to independent brand creation

"Every enterprise that starts with OEM has its own brand dream," Xu Jianhui said in one sentence, expressing the voice of the small household appliance enterprise in Cixi.

Exporting OEM products to international brand merchants is a familiar path for many small home appliance enterprises in Cixi during their initial stages, which also makes brand building a challenge. A small home appliance practitioner told reporters, "Whenever I see my carefully designed products being labeled with logos from other brands, I feel a regret of 'making wedding clothes for others'."

Xu Jianhui recalled that during the 2008 international financial crisis, due to the lack of its own brand and the sharp decline in orders from foreign partners, Zhuoli was forced to shut down production and its employees returned home, causing huge difficulties in its operations. This setback made Zhuoli realize that OEM is not a long-term solution, and companies need their own brand as support in order to take the initiative in the fierce market competition.

In 2015, Zhuoli Group launched its independent brand "Zhuoli", specializing in ironing home appliances. According to Xu Jianhui, after several years of market accumulation, the domestic sales of Zhuoli's independent brand are considerable, which has opened up new market space for the group.

The leading enterprise in the field of personal care small home appliances, Yueli Group, is also a successful case of the branding transformation of Cixi small home appliances. Li Lizhong introduced that the group has cooperated with many well-known brands for many years, and has a complete supply chain and advanced production technology, which is also the confidence of Yueli to try independent brands.

"In 2016, Yueli's independent brand was officially launched, and now the brand matrix construction has achieved certain results." Li Lizhong said, "On the basis of thorough research on the domestic consumer market, we have launched the 'Xiaoshi' brand targeting young consumers. In the process of operation, we focus on differentiation and refinement, such as designing VC series hair dryers that are suitable for the needs of young women. They not only can blow hair but also have hair care functions, and once launched, they have become popular."

Whether the brand management is good or not depends on the data. Within one year of its launch, Xiaoshi's sales exceeded 100 million yuan, with year-on-year growth rates of 100% and 50% in 2021 and 2022, respectively.

The government of Cixi City is adopting various measures such as the "Brand Strong City" strategy to encourage local enterprises to create independent trademark brands, promote both domestic and international sales in the industry, and promote high-quality development in industries such as home appliances. Under the guidance of relevant policies, the transition from "OEM" to "OEM" has become a consensus for the development of small home appliance practitioners in Cixi.

"The development of enterprises cannot rely solely on OEM to 'walk on one leg'. Establishing independent brands can firmly control the pricing and sales rights of products in one's own hands," said Hu Wei. Cadillac is using its self operated coffee machine brand "Wawa" as a breakthrough point for its independent brand construction. By participating in trade shows, opening e-commerce live broadcasts, and other means, it has opened up product sales, established brand awareness, and closely followed the trend of branding in the small home appliance industry.

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