Home improvement firms keen to cash in on e-commerce boom
Japanese firm Lixil looks to tap growing demand for high-end Japanese interior products in China
The rapid growth of e-commerce has had a huge impact on the shopping habits of mainlanders with online sales of food, clothing and other daily necessities rising in tandem with increasing internet connectivity.
Big players in the home improvement sector such as Lixil Group, a leading building materials maker from Japan, are banking on the internet to get a toehold in the world’s most populated market — China.
Lixil’s optimism stems from brand-crazy mainland shoppers who are willing to fork out thousands of yuan on furniture and kitchen utensils in self-indulgent displays of social status.
The company believes that consumers who purchase high-quality imported products always rely on the brand equity.
“People are going for more designs,” said Francois-Xavier Lienhart, chief executive of Lixil Kitchen Technology. “You are successful in life and want to buy a piece of furniture that your neighbour does not have. It is something that you want to be proud of.”
China’s home improvement market is estimated at 4 trillion yuan (HK$4.73 trillion), propelled largely by the millions of home owners looking for premium building materials, furniture and kitchen utensils to decorate their multi-million-yuan apartments.
Japanese products such as kitchenware and sinks are among the most actively sought after products for their unique design and excellent performance.
Lixil recently partnered with BDHome, a 3D online platform for home deco in China, to launch a do-it-yourself (DIY) online store catering to wealthy mainlanders. The company plans to take on established foreign brands that are already well received by Chinese people.
The company is offering a 3D virtual space at its online store that helps customers have a first-hand feel of the decoration experience and cash in on the growing popularity for Japanese interior products.
In 2014, about 2.41 million mainland tourists visited Japan, an 83 per cent growth from the levels in 2013, with a per capita spending of 12,000 yuan, according to the Japan National Tourism Organisation.
Lienhart said the online store could provide Lixil with a fast ticket to the mainland market as a right partner could facilitate the design and development of proper kitchen products for mainland customers.
“We want to sell products which are at the forefront of innovation in China,” he said. “It’s the right time.”
The rising popularity of internet in the world’s second-largest economy has brought a sea change to the China’s commercial landscape as customers’ changing shopping habits have prompted manufacturers to create personalised experiences while they surf the internet for their favourite products.
“In China, innovation mainly refers to the use and integration of existing technologies to address the real needs of the consumers,” said He Yong, vice president of New Third Board Club, an investment consultancy . “A display of best-quality kitchen products and furniture on a 3D platform is not a bad choice.”
China’s policymakers are advocating an internet plus strategy to encourage companies to use internet and mobile technologies to enhance efficiency in production and commerce.
Despite worries about a bubble in the e-commerce and e-finance sectors on the mainland, companies ranging from property developers and banks to restaurants are speeding up the development of business models based on internet in order to get a leg up on their rivals.
“Money is no longer a concern,” said Dong Yanjun, a white collar worker from Shanghai who has just bought a two-bedroom apartment. “When I start decorating my new home, I need to find the best products. It is important that the brands convince me about what is the right choice for me.”