2020 has been a challenging year for all industries. The comfort Home industry is no exception. Despite the short-term impact of the COVID-19 pandemic, China’s Comfort Home industry is projected to grow considerably.
The Market Potentials will be Unleashed Continuously, Creating more Opportunities for Companies in the Industry
According to Steve Li, General Manager of Rheem China, the epidemic has deepened awareness of the importance of physical and mental health. As it turns out, due to the epidemic, the market demand has become distinctive of the pursuit of quality lifestyle, which will have a more profound impact on consumption decision-making in more categories, and will even reshape the lifestyle and consumption focuses of Chinese consumers in the long run.
Comfort Home not only represent new requirements for comfort, but also a lifestyle. Consumers are willing to spend on good and reputed products and acclaimed brands. Therefore, the complexity and uncertainty in a market environment is also the best touchstone of the performance of a company and brand.
Rheem entered the Chinese market in 1994. Last year, Rheem Group announced China to be one of the most important regions to promote its Globalization strategy, and invested in the construction of an R & D Center and an Innovation Learning Center in the Chengdu headquarter. Over the past years, Rheem’s products have been designed and built with consideration to all aspects of product performance, installation, maintenance, duration, reliability, and integration. The technologies the company has developed and the functionality it has designed for the various products are almost all centered on the comfort of users and are intended to address the major concerns of consumers.
Li believes that, driven by the post-epidemic industrial evolution and consumption upgrade, Rheem, as a century-old brand, will forge ahead confidently, align innovative technologies with the new demand of consumers, and embrace remarkable growth.
Focus on Core Competency and Persist in Sustainable Development
The key to making the best of the huge demand in the Chinese market and growing the business is independent innovation and market expansion. Li emphasizes that given the intense competition in the comfort home market, a brand must embody product quality, after-sales service, corporate management, technological innovation, and many other aspects, as only brands reputed for high quality and high level of credibility can secure a foothold among consumers.
In recent years, Rheem has become the first choice of many well-known Chinese brands such as Haidilao and Home Inn for high-quality central water heating services. They choose Rheem to advance their internal upgrade and transformation to improve their marketing performance, which also reflects Rheem’s excellent application of resources in central water heating and heating products.
Therefore, a company should not only direct attention to growth data, but should also strive for the second growth curve and green, sustainable development.
China implemented the mandatory national standards for energy efficiency in heating, ventilation, and water heating products, etc. in 2020, which play a positive role in motivating enterprises to advance energy-saving technologies and promoting the healthy development of the industry. The Energy Efficiency Standards for the Design of Residential Buildings implemented on January 1, 2021, in Beijing also pose higher requirements for an energy-saving design for heating, ventilation, and air-conditioning systems. The future trend will be characteristic of green, energy-saving, healthy, and livable. For the industry, the implementation of such standards promotes healthy competition and highlights the importance of the development of energy-saving and environmentally friendly products as well as the realization of sustainable development.
Over the past century, Rheem has been the global leader of heating, cooling, and water heating solutions, and has been at the forefront of sustainable development in the industry. For example, it has developed a competitive edge in continuous green, energy-saving technological innovation for homeware. In the field of heating products, Rheem will launch the Xclusive condensing combi boiler, which, compared with other condensing boilers, is equipped with a patent 2-in-1compound heat exchanger to realize high-efficient rate both on water heating and central heating and groundbreaking condensing technology that does not require switching valve, three-way motor and secondary heat exchange to realize double condensation of both heating water and domestic hot water.. In the field of traditional water heaters, Rheem launched the EMAX instantaneous electric water heater, which features small size and high performance, and provides multiple protections from five different aspects that raises the safety standard to the highest level. In the field of air source heat pumps, Rheem’s 1.5P integrated built-in 180L water tank achieves the first-level energy efficiency and fully meets the needs of apartment residents for convenient use of domestic hot water. The development of products with enhanced comfort and the delivery of a good user experience has become a market booster for green products in the industry.
According to Li, Rheem keeps optimizing the production system in the process of product innovation to minimize the impact on the environment, and empower customers and employees to work and live sustainably. This is also part of its sustainability goal: Designing for Zero Waste.
Rheem will implement the following three strategies until 2025:
Degrees of Innovation: Launch a line of heating, cooling and water heating products that boast a 50% reduction in greenhouse gas footprint.
Degrees of Efficiency: Reduce greenhouse gas emissions by 50% and achieve zero waste to landfill in its global manufacturing operations.
Degrees of Leadership: Rheem will train 250,000 plumbers, contractors and key influencers on sustainable products or sustainable installation and recycling best practices.
Li holds that every company has the strengths that enable it to go a long way, and also its weaknesses that remind it to move on stably. The consumption upgrade and consumers’ increasing environmental protection awareness have further customized and segmented the needs for water heating and heating products for both residential and commercial use. In response, Rheem will keep consolidating the foundation, focus on the core businesses and product lines, and strive for quick breakthroughs.
In the past year, Rheem has upgraded and transformed its R & D laboratory and assembled an R & D team. For the year ahead, Rheem will further improve product planning, expand the R & D system, and more importantly, deliver quality product solutions and services. Li emphasized that Rheem’s R & D team will not only serve the Chinese but also the global market, just as the company expects its China unit to begin with “China for China” and proceed to “China for Global”. Meanwhile, Rheem will devote major efforts to four categories – gas combi boilers, domestic heat pumps, commercial water heating products, and commercial boilers, develop cutting-edge technologies, and make a profit from these core businesses.
Pursue Market Expansion and Robust, Innovation-driven Growth
The emergence of the huge mobile Internet community has given rise to a new channel in the Chinese market – new retail. Objectively speaking, the Comfort Home industry is a traditionally offline industry. In the past, most of the sales in the industry depended on offline channels. The COVID-19 pandemic in 2020 has promoted in-depth exploration in online shopping. At the time when offline sales were impeded, a lot of brands and distributors changed their strategies, turned to e-commerce platforms, and achieved good sales. In this context, Rheem will make e-commerce channel development one of its important brand growth strategies, accelerate digital transformation, leverage the Internet technology to build comprehensive online platforms and channels, strengthen innovative and coordinated development in marketing models and channel reforms, and strive for new business growth through new channels in 2021.
Li summarized the operational strategy of Rheem into three points: Invest to Grow, Innovate to Lead, and Deliver on Commitments. They encompass the focuses of the company in channels, products, operations, and team building.
Invest to Grow: Rheem invested the most in Rheem China over the past year than it has in the past decade which covered R & D, production, marketing, and sales, including the establishment of the R & D Center and the Innovation Learning Center, the construction of offline and online stores, digital marketing, as well as brand building. Rheem will continue to increase investment, further explore the online and offline channels, expand the customer base, and deepen market expansion in China in 2021.
Innovate to Lead: Rheem was founded on the principles of innovation and today that continue to be its growth engine. R & D is the top priority of Rheem’s innovation efforts. The establishment of the China R & D Center in the past year has created a platform for the company to enhance product R & D. This year, Rheem will continue to improve the local R & D capacity, and strengthen local product planning and design. The company will focus on tank-type products in the upcoming innovation projects, and at the same time develop industry-leading combi boilers, instantaneous gas water heaters, and tankless electric water heaters.
Deliver on Commitments: the core of integrity-based delivery lies in the Chengdu plant, which has evolved into a world-class factory for the production of tank-type products through continuous, repeated iteration, investment, and the launch of new production lines. Based on the strength of years of experience, a large number of loyal, senior employees, and honest, experienced technicians, Rheem has developed a competitive advantage in products that can hardly be overtaken by competitors. Recently, Rheem has strengthened the supply chain function and prepared itself for new challenges through upgrades and reinforcement of both the internal and external supply chain.
Following the three guidelines, Rheem will continue to solidify the foundation, stabilize the operations and seize every opportunity to pursue robust, innovation-driven growth, and achieve healthy development through the creation of shared values with its partners. 2021 will surely be a fruitful year for Rheem!