Intelligent facility in Suzhou will exploit consumption upgrade, BRI, New Retail

Ecovacs Robotics, a manufacturer of home-use robotic products, will open a new intelligent manufacturing facility in Suzhou, Jiangsu province, this year.

Already China's largest player in its niche in terms of market share, Ecovacs plans to garner more market share in the economies participating in the Belt and Road Initiative, besides intensifying its competition with established foreign rivals in other regions, said its senior executives.

In the New Retail era, fresh growth opportunities are coming from China's policies to stimulate domestic consumption via online and offline platforms, they said.

A faddish term coined in 2016 by Alibaba's charismatic founder Jack Ma, New Retail refers to the integration, or interlinking, of online and offline shopping using modern technologies, data and customer engagement techniques. Ma believes New Retail is blurring the distinction between physical and virtual commerce.

Ecovacs has been exporting its robotic vacuum cleaners to a number of global markets such as the United States, Germany, Spain and Japan. Now, the Suzhou-headquartered group intends to deploy more resources in fast-growing markets. These include Russia, the United Arab Emirates, Israel and member economies of the Association of Southeast Asian Nations, said Jonathan Tang, Ecovacs' vice-president and head of global business.

Ecovacs will harness the power of both physical stores and e-commerce over the next three years, he said. "Not only in China, higher incomes have helped consumers in many parts of the world to increase their purchases of high-end home appliances like robotic vacuum cleaners and other types of digital products."

Consumers can save more time to do the things they want with the help of digital technology. With its products to be sold in over 5,500 supermarkets and stores in overseas markets, Ecovacs will constantly aim to challenge perceptions and find out the limits of technology, to empower people by freeing up their time, he said.

"The New Retail era has also impacted the after-sales market, raising the bar on user experience and operational efficiency."

These new developments are reshaping the value chain of the modern retail sector, he said.

Ecovacs launched a range of domestic robotic products equipped with mapping and navigation technology in 2018. It sold 4.14 million home-use robots in the global market, with sales revenue jumping 34.69 percent year-on-year to $584 million.

Sales in the US market alone increased by nearly 100 percent year-on-year, thanks to online and offline channels. By the end of 2018, Ecovacs' robotic vacuum cleaners were available at more than 3,500 offline retail outlets in the US operated by mainstream retailers such as BestBuy, Target, Home Depot and Costco.

"We will continue to focus on the home robotics segment and continue to optimize our product portfolio this year, and also invest more in the development of machine vision technology and AI, and push the performance of the service robotics to the next level," said Tang.

Supported by over 6,000 employees, the company operates two production bases in Suzhou and Shenzhen to produce robotic products that can clean floors and windows, and purify air. It has several branches around the globe, including in the US, Spain, France and the United Kingdom.

Liu Wenning, Ecovacs' general manager for China, said the company will expand its store presence in China as well, from 1,500 to over 2,000 this year, especially in lower-tier markets.

In the offline space, Ecovacs has partnered with Alibaba, JD and Suning to establish partnerships in New Retail, and set up offline experience stores to strengthen its brand image.

With the pace of 5G commercialization accelerating, and new infrastructure and technologies like artificial intelligence and the internet of things constantly improving, they have created a unique marketplace in China for products and services where access to them comes with unprecedented speed and convenience, said Liu.

"Unlike consumers in overseas markets, customers at home are incredibly inquisitive and hungry for information. They want to embrace new technologies and are fairly open to disruptive products," he said, stressing that with the rapid development of intelligent technology, the smart home has certainly become an industry trend.

Innovators in AI, e-commerce, New Retail and social media have performed strongly in recent years against a backdrop of heightened competition and disruption. So building stronger brands is what it takes to stay in the game, Liu said.

To remain competitive, the company established an AI Institute in Nanjing in 2018 to further enhance the research and application of AI in robotic perception, decision-making, behavior and human-robot interaction.

The company's spend on R&D rose by more than 60 percent year-on-year to 205 million yuan ($29.7 million) last year, according to its 2018 fiscal report released in late April.

"The digital transformation of traditional industries; online companies expanding their offline businesses; and the improvement of technologies such as logistics, voice recognition, mobile payment and group purchase ... all these have enhanced the quality of retail business and improved consumer experience," said Sun Fuquan, a researcher at the Beijing-based Chinese Academy of Science and Technology for Development.

So, online consumption will continue to play a significant role in boosting the whole consumption segment in the future, he said.