Why this is important to Wisconsin businesses: The whole industrial chain of smart home products can benefit from the growing adoption of this technology worldwide, particularly in China.
In recent years, with the rapid development of new technologies such as the Internet of Things (IoT), artificial intelligence and 5G, smart home technology has passed the three stages of automation, single product intelligence and IoT, and entered the period of whole house intelligence. As the global demand continues to grow, China’s market has proved to offer the greatest potential, which provides opportunities for Wisconsin companies throughout that technological field.
The whole industrial chain involved in the smart home market is divided into upstream, midstream and downstream industries. Upstream industry includes manufacturers of communication modules, parts, chips and related technical supports. Midstream includes supporting platforms, such as system operation platforms, developers, service platforms, data platforms and application platforms. Downstream of the industry are smart home appliances, intelligent security, intelligent lighting and intelligent hardware that consumers use. This research mainly focuses on the downstream segment of the industry; however, growth in the downstream market will undoubtedly promote the demand in upstream and midstream markets.
Smart home technology is regarded as a new internet application entrance that can be applied in various scenarios, including video and audio entertainment, home security, intelligent bathrooms, intelligent kitchens and intelligent sleep. In China, smart home devices are rapidly gaining popularity. According to market consulting firm iMedia Research, China’s smart home market reached $26.5 billion USD in 2020, up 11.4% from the previous year, and it is expected to exceed $31 billion USD by 2022. By the end of 2019, China had become the world’s largest market for IoT, with 960 million of the world’s 1.5 billion cellular connected devices in use in China. According to the white paper on the Ecological Development of China’s Smart Home Market in 2020, released by the China Smart Home Innovation Association, China will become the world’s largest smart home consumption market with a market share of 50-60%, and profits from China will account for 20-30% of total market profits globally.
However, despite the continuous growth of China’s smart home market, the penetration rate in China is still quite low. According to the market research firm Statista, the use of smart home devices in 2018 was around 12.2% globally and 32% in the U.S., while in China, less than 5% of homes were equipped with the technology. From the perspective of regional distribution, users in first-tier cities account for 29.3% and those in second-tier cities account for 23.4%. As the application of smart home technology scales at an accelerated pace and with the promotion of new technologies, the Chinese market is expected to boom in the near future, and opportunities in smaller cities with a population of more than 900,000 are becoming attractive.
The future development of China’s smart home market is strongly backed by government policies. After being written into a government work report in 2016, the development of the smart home market was upgraded into one of the six most important projects in 2017, showing that the government has given full support to the industry at a political level. According to Guidelines for the Construction of Smart Home Comprehensive Standardization System, published in 2016, a standard system for China’s smart home industry will be established soon.
As for consumer preferences, a survey by Sina Home showed:
- Nearly 80% of those surveyed are familiar with whole house intelligence and more than two-thirds of them are willing to use the technology in their future homes.
- The most popular product segments are smart home appliances, smart locks, smart audio devices, smart panels and electric curtains. During the product selection process, people are more concerned about practicality, brand and supporting installation services.
- Around 28% of them prefer using a smart panel for controlling the devices, while about 20% prefer using a mobile app.