The Biggest Barrier for Kitchen Appliance Brands Entering the Major Home Appliance Industry

Since the end of June, news about a significant layoff (70%) in the washing machine division of Roborock Technology has been circulating online. This news has been interpreted as Roborock Technology’s "second growth curve" encountering failure and as a signal of a strategic shift under the leadership of a technology-driven team. It is worth noting that Roborock Technology has not yet issued an official response.

For a time, the question of how high the barriers to entry are in the "large white goods" industry and the prospects of small kitchen appliances entering the major appliances market have once again sparked discussion.

White goods are also a "big cake".

Just as major home appliance companies focused on air conditioners and refrigerators ventured into kitchen appliances more than a decade ago, in recent years, small kitchen and bathroom appliance enterprises have also taken steps to enter the major appliance (especially white goods) sector.Previously, major appliance companies ventured into the kitchen appliance sector, viewing it as "the last piece of cake in the home appliance industry." Similarly, current kitchen appliance companies view white goods in the same way.

A typical example among them is Dreame. In March this year, the cleaning appliance brand Dreame announced its major appliance strategy and simultaneously showcased innovative products such as air conditioners, refrigerators, and washing machines. Among these, the "robotic arm air supply technology" of the air conditioner was particularly eye-catching. Just two months later, Dreame's major appliance base, with a total investment of 4 billion yuan, broke ground in Lishui, Nanjing, Jiangsu. It is understood that the base will construct a total of six new production lines for washing machines and refrigerators, with an expected annual production of nearly 5 million units. The facility is expected to be completed and put into operation by mid-2027.

In 2023, Stone Technology, which is also in the cleaning appliance industry, embarked on a journey into the washing machine sector. With its self-developed molecular sieve low-temperature drying technology, Stone Technology garnered significant attention and made a splash during that year's 618 shopping festival.

As two leading enterprises in the kitchen appliance industry, Fotile and Robam both announced plans to enter the refrigerator market in 2022. Fotile’s refrigerators debuted in 2022, focusing on fully flush built-in designs, and in 2024 introduced ocean-grade nitrogen preservation technology, dedicated to creating a new generation of high-end, fully built-in refrigerators worldwide.

"Sheep entering a herd of horses," what exactly is the reason?

An industry insider once told me that small kitchen appliance companies entering the air conditioning, refrigerator, and washing machine sectors is a typical case of "a sheep entering a herd of horses." I immediately understood that this description referred only to scale, and nothing else.

So what are the reasons that drive companies with a scale of tens of billions to eagerly venture into fields where their peers are valued in the hundreds of billions? The answer is quite simple, mainly four reasons:

1The need for the development of kitchen appliance companies themselves.

2Opportunities brought by scenario-based consumption at the terminal.

3Diversification of channels, especially the rise of new e-commerce platforms.

4Opportunities brought by brand rejuvenation.

The first reasonIt goes without saying and need not be stated here.

The second reason:Terminal scenario-based consumption refers to the recent trend where users' purchasing habits have evolved from standardized sets to kitchen scenarios, kitchen and bathroom scenarios, and then to home living scenarios in a step-by-step manner. Fundamentally, this reflects users' pursuit of aesthetic unity and convenience and efficiency in consumption. The flip side of this issue is that users are unwilling to put effort into brand selection and comparison. The entry of brands like Fotile and Robam into the refrigerator market belongs to this category.

The third reason:In recent years, online channels have been continuously evolving. From platform-based e-commerce to content-driven e-commerce, many new brand success stories have indeed been created.

The fourth reason:The essence of brand rejuvenation is that young consumers are taking center stage. More precisely, it’s not just young consumers taking the stage, but rather, in today’s age of fragmented information, users who have grown up in the eras of the internet, mobile internet, and AI are taking the stage in successive waves.The fundamentally different growth environment, information access methods, and preference choices have led young consumers from generation to generation to begin "demystifying brands," which presents an opportunity for newcomers.

What is the biggest obstacle?

As mentioned earlier, when small kitchen appliance companies venture into the white goods sector, will they be squeezed out like a "sheep among horses," or will they be able to carve out a niche for themselves with their unique characteristics?

According to data from the National Bureau of Statistics, 2024At the end of the year, the number of air conditioners, refrigerators, and washing machines per 100 households was 150.6 respectively.Taiwan, 104.8Taihe 99.2 At this level of market penetration, it is evident that the original enterprises in the white goods sector are facing intense internal competition. Strict cost control and the ability to manage the entire industry chain are the primary requirements.In other words, the scale effect in the white goods sector is the primary pressure that small kitchen appliance companies have to face.

The second is the technical barrier.Although it is often said that there is a technological ceiling in the white goods sector, especially for air conditioners, the long-standing accumulation of technology and the patent barriers that have been established are not something latecomers can surpass with just one or two technological breakthroughs. This is something that all kitchen appliance companies should reflect on.

The third is the depth of channels and the resulting service capabilities.The brand channel penetration capability in the air, ice, and washing sectors has been accumulated over many years, especially with leading brands having penetrated down to the channel capillaries (communities and villages). This is not only something that online-focused cleaning appliance companies cannot achieve, but even leading kitchen appliance companies do not have an advantage in this regard.

The last and most important, yet often misunderstood, is brand power. Here, the author prefers to interpret it as the ability to influence the number of consumers.The term "brand demystification" refers to users no longer being blindly loyal to a brand, rather than rejecting the genuine influence of a brand.Regarding brand history, the leading enterprises in the major home appliance sector each have a long journey. Whether in cleaning appliances or kitchen appliances, they have no disadvantages compared to each other. In terms of annual brand building investment, brands with a scale of hundreds of billions, whether in brand investment or R&D investment, are on a completely different level compared to late entrants. If we compare in terms of youthfulness or being closer to consumers, this issue can again be attributed to the level of brand investment.

Scale, technology, channels, and service are all important. However, the seemingly intangible brand influence ultimately determines the competitive prospects of small kitchen appliance companies in the white goods industry.A corroborating example is that Xiaomi is also a late entrant and similarly lacks the aforementioned advantages compared to white goods brands. However, at least so far, Xiaomi has met its own expectations. Behind this success is precisely the wide reach and deep engagement of its "Mi Fans." "Let users know you are doing this, let users know you are doing this well," this is brand power, said the aforementioned industry insider.

Of course, this is not to say that it is a mistake for small kitchen appliance companies to enter the white goods market. Finding the right positioning and extending and expanding one’s own advantages is, in itself, a form of success. In this respect, there is no shortage of newcomers.