As connectivity to the world wide web increases, more and more industries strive to integrate their products and services into the new digital age. This process is called digitalization and China is among the leading countries. A high internet penetration, consumers open to new technologies, and an innovative tech-industry provide the ideal breeding ground for China’s transition into a digital world.
Few industries could serve as a better example of the modern digitalization process as the smart home industry. It encompasses the digitization and interconnection of various household appliances and electronic consumer goods which include TV’s, speakers, and even rice cookers. Since most consumers use these products, the barrier for having a smart home is low, thus creating a large user base. In China, over 68 million households use smart home products.
Many large electronic product producers in China digitize their products and provide corresponding smartphone software. The household appliance producer Haier Smart Home and the consumer electronics company Xiaomi, for instance, both offer digitized versions of their products. From the washing machine to the air purifier, almost all smart home products can be connected to the user’s smartphone, enabling centralized control of the home.
Value creation through digitalization
When industries and product manufacturers seek to create added value through digitalization, the backbone of that process is the transformation of products or processes from analog to digital. This is also a key concept of Industry 4.0, which describes a new industrial revolution where digital technologies disrupt conventional supply chains and reshape the manufacturing industry. The outcome is a more efficient production process, better customer experience, and new business models. In short, it is the pathway to the smart factory.
In the context of the smart home, the created value for the customer is the interconnected environment at home. Hence why most smart home producers in addition to the product provide a mobile app that connects and brings together all devices in one central place. For instance, Xiaomi offers the MiHome application, Haier has Haier Smart, and Huawei’s smart home app is called SmartThings.
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Research expert covering fiance, real estate, and technology in Greater China