Hisense ups R&D efforts for bigger market presence

Chinese home appliance manufacturer Hisense Group has ramped up its efforts to develop self-owned brands, increase investment in localized research and development and roll out high-end products in Australia, as the company eyes a bigger footprint in overseas markets.

"We entered the Australian market in 2006. There were no indigenous home appliance brands in Australia and most of the products are dependent on imports," said Zhang Xifeng, managing director of Hisense Australia Pty Ltd, adding the company started as an OEM or original equipment manufacturer at the early stage, but determined to establish self-owned brands in an attempt to enhance its core competitiveness.

Zhang said it has placed great emphasis on expanding Hisense's offline retail channel, especially brick-and-mortar stores, as e-commerce is underdeveloped in Australia and sales from online marketplaces are very limited.

"Our product line has become more diversified in Australia in recent years, with categories ranging from televisions, refrigerators, freezers and air conditioners to washing machines and dishwashers. We design and manufacture home appliance products in accordance with local consumer demand and purchasing habits," Zhang added.

Hisense is speeding up its overseas expansion in high-end laser TVs and ultra light-emitting diode, or ULED TVs, which have great improvements in terms of image quality, with the sales of laser TVs surging by more than 170 percent year-on-year in the first six months in Australia.

Zhang said they have faced multiple challenges and temporary emergencies, mainly from the supply chain due to the COVID-19 pandemic, which is also a test for their capacities in management, sales forecasting and quick response.

At present, sales of refrigerators and TVs have accounted for more than 80 percent of its total revenue, Zhang said, adding "we need to continuously optimize the product structure, increase sales of premium products and expand into new categories."

Revenue from overseas markets is expected to take up more than half of the total within three years, said Jia Shaoqian, president of Hisense, adding that the company has strengthened cooperation with countries and regions participating in the Belt and Road Initiative. It also plans to establish new R&D centers in the United States and Japan.

Dong Min, deputy secretary-general of the China Video Industry Association, said the domestic home appliance market is almost saturated though and companies need to seek new growth points.

"Expansion into overseas markets will not only relieve the pressure of high inventories in the domestic market but increase the international influence of Chinese home appliance companies," Dong said.

Hisense purchased Sharp's TV business in Mexico and acquired Sharp America's TV line for the North and South American markets in 2015. The company acquired a 95 percent stake in Japan's Toshiba Visual Solutions Corp in 2017, as part of its efforts to expand globally. In August 2018, it completed the acquisition of Slovenian appliances producer Gorenje.

"In the past, most Chinese enterprises adopted the OEM model, but nowadays they tend to build up their own brands to participate in global competition," said Liang Zhenpeng, an independent consumer electronics analyst.

Liang added that establishing overseas branches or production bases not only brings China's advanced manufacturing, research and development, and management capabilities to overseas markets, but also creates job opportunities for locals and enhances the competitiveness of Chinese enterprises on the global stage.