Sparks Industry-wide Reflection
“When invincibility breeds loneliness.” When competition among enterprises boils down to a contest of comprehensive strength, even industry trailblazers will find themselves isolated. Means conducive to industrial development, such as product innovation, marketing innovation and interest innovation, become less critical, for competition is ultimately determined by the magnitude of an enterprise’s comprehensive strength. Under such circumstances, innovative small and medium-sized enterprises in niche segments of the small home appliance industry have little room for breakthroughs. The consequence will be sluggish development across the entire industry. Seeing no hope while clearly perceiving their destined fate, enterprises will lose their motivation for invention and creation, which will ultimately undermine the sound development of the small home appliance industry as a whole.
BBK Home Appliances, positioned by BBK’s board of directors as a key strategic segment for the company’s future, was founded in March 2008. Up until its dissolution was announced, BBK Home Appliances never gained a firm foothold in the market. It reaped no rewards, only endured endless hardships, and finally folded before reaching its third anniversary. Its premature demise not only relieved many existing small home appliance manufacturers, but also marked the failure of the third typical growth model in the small home appliance industry.
As we all know, there are three representative growth models in the small home appliance industry. The first is the “all-round champion” model represented by Midea. Starting with rice cookers, Midea has expanded its product portfolio to microwave ovens, induction cookers and other categories, covering almost the entire range of small home appliance products. The second is the “single-category champion” model epitomized by Joyoung. Originating from soybean milk makers, Joyoung has extended its business to induction cookers, electric pressure cookers and other small home appliances. The third is the cross-border model led by BBK: enterprises with rudimentary product operation experience in other sectors enter the related small home appliance industry through limited diversification. When BBK entered the small home appliance sector, it exerted considerable pressure on incumbents. Its previous successes in other industries made existing players feel that a formidable competitor had arrived. Furthermore, BBK had long maintained a mysterious corporate operation style, leaving its rivals unable to conduct in-depth research on this new competitor, let alone achieve the ideal state of “know the enemy and know yourself, and you can fight a hundred battles with no danger of defeat”.
BBK, a representative cross-border player, has suffered a crushing defeat in the small home appliance sector. Now, Joyoung, the once “single-category champion” of the small home appliance industry, is also witnessing a year-on-year decline in its market share. This has raised new questions over the future development of the small home appliance industry: Firstly, has the small home appliance industry entered an era of slim profits? Secondly, has competition in the sector evolved into a duopoly where only the top one or two players can prevail? Thirdly, in the future competition of small home appliances, will it inevitably follow the same fate as large home appliances—a battle purely of comprehensive strength?
It is widely acknowledged that in the small home appliance industry, both single-category champions and powerful new cross-border entrants will find themselves trapped in a tough fight against conglomerates like Midea. They will gradually lose their competitive edge, and eventually be squeezed and overtaken by enterprises with strong group backgrounds and brand influence such as Midea. Benefiting from its formidable comprehensive strength, Midea does not need to pursue excessive innovation in future competition. It can establish an unassailable position simply by adopting a follow-up or replication strategy, coupled with optimal resource allocation. Such a competitive landscape is likely the primary reason why Midea has been dubbed the “public enemy of the home appliance industry”.
