Lu Xiongwen(陆雄文), Dean of the School of Management at Fudan University, once commented on Tineco: "Tineco is the newborn of the Ecovacs Group. Although he is only 5 years old, he is talented, eager to learn, and likable, and even irresistible." "In some fields, Tineco can be called a'little Huawei '."
In 2018, the "TINECO添可" brand was officially launched. As the pioneer and definer of floor scrubbers, Tineco successfully turned floor cleaning machines into a "billion-dollar product" within just five years. While still being synonymous with floor cleaning machines domestically, Tineco has already introduced a range of smart small appliances overseas, including vacuum cleaners, carpet cleaners, and toasters, with overseas revenue accounting for over 30% of the total revenue.
As a "born challenger," Tineco has now made a lofty pledge, aspiring to become the leading global brand in floor cleaning within the next three years. It aims not only to surpass its sibling brand Ecovacs but also to fearlessly compete with Dyson, the long-standing industry leader. Where does Tineco's courage come from? Along its journey towards global expansion, what has Tineco done right? In order to become a globally recognized brand, what challenges does Tineco still face? The following is the conversation between EqualOcean and the General Manager of Tineco International Division.
EqualOcean: Why set up a subsidiary and new brand Tineco under Ecovacs in the first place?
Tineco: This stems from the innovative thinking of our management team. From 1998 to 2018, Ecovacs spent 20 years deeply cultivating the floor cleaning industry and accumulating profound insights into the pain points of both the industry and consumers. Upon recognizing the trend of artificial floor cleaning transitioning into the era of intelligence, we saw it as a "blue ocean market" within the otherwise crowded and competitive floor cleaning industry. We believed in taking a long-term, "All In" approach rather than simply adopting a wait-and-see or replicating Ecovacs' path. As a result, we established a new subsidiary and a new team, created the brand "Tineco," and launched our floor cleaning products.
Based on the current results, it is evident that this decision was the right one. The floor cleaning category, which was initially dominated by robotic sweepers, has now evolved into a market divided among robotic sweepers, vacuum cleaners, and floor scrubbers.
EqualOcean: From a global perspective, what is Tineco's most popular product?
Tineco: The entire floor cleaning category is highly popular. Among them, floor scrubbers and vacuum cleaners are absolute standout products, with a market share of over 50% in various markets, and in some markets, reaching as high as 80% to 90%.
EqualOcean: In summary, what are the main attractions of such products overseas?
Tineco: Our starting point for choosing the market and developing products is always to address user needs. While floor scrubbers have gained significant popularity in domestic markets, their awareness and adoption overseas are not as high. Recognizing this difference, in the early stages of introducing our products to international markets, we offered a mass-market, entry-level version in the form of an electric mop. Throughout the iterative process of technology and product development, we have actively listened to consumer feedback and responded to their deeper desires. Users have experienced firsthand how our products address their pain points, deliver high quality and reliability, and they are consequently more willing to share their positive experiences with friends and family.
EqualOcean: Is the floor scrubber going global a dimensional blow?
Tineco: I don't think so. From the perspective of the entire field of floor cleaning, vacuum cleaners and sweeping robots have undergone sufficient market education overseas, with a very high penetration rate, especially vacuum cleaners, which are basically essential for every household. However, as a new category, floor scrubbers are not widely recognized by overseas consumers. Therefore, we are not considering floor scrubbers as a separate category when we go global at this stage, but have proposed the concept of "dry and wet dual-use floor cleaning products". Based on the experience accumulated in the domestic market, we are still in a down-to-earth and step-by-step state of tapping market potential when we go global.
EqualOcean: In the first half of 2023, Tineco's overseas revenue grew by a remarkable 24.2%, accounting for 30.9% of the total. How did Tineco achieve such strong overseas revenue growth amidst a market downturn?
Tineco: The penetration rate of floor scrubbers in overseas markets is not high, and the base is relatively small, making it less affected by the overall decline in the floor cleaning category. Over the past few years, we have continuously invested in market education, positioning our floor scrubber products as the most differentiated and capturing consumers' mindshare. This has gradually led consumers to accept both the floor scrubber as a new product category and Tineco as a new brand, steadily expanding our market share.
After accumulating a certain brand momentum, Tineco also entered the existing market with vacuum cleaner products, further competing for market share. This business segment not only expanded from scratch but also offered products with superior parameters, performance, and cost-effectiveness. As a result, it continued to grow despite the market downturn. With the combined forces of these two factors, Tineco's overall business growth outpaced the market.
EqualOcean: What are Tineco's main overseas sales channels?
Tineco: As of this year, we have established a comprehensive sales network covering all channels overseas. In the first half of this year, Tineco's sales through online channels, specifically targeting the Amazon platform, accounted for less than 50% of the total. Simultaneously, we have been focusing on strengthening our official website as an online sales channel. The remaining approximately 50% of sales come from Key Accounts (KA) channels, including prominent retailers such as Walmart, Target, Costco in the United States, and Metro, Otto in Germany. In the Asia-Pacific region, we have even started exploring the establishment of self-operated flagship stores.
EqualOcean: As a new brand, can it enter major chain supermarkets at such a fast pace, relying on the channel resources accumulated by Ecovacs overseas?
Tineco: Actually, it doesn't have much to do with each other. The original idea of founding Tineco was to avoid relying on the successful experience of Ecovacs. The teams of the two brands are also independent, and many KA customers did not know the close relationship between the two at the beginning. Tineco relied on its own sales and brand momentum to be accepted by large channels.
EqualOcean: Which overseas markets are your most important?
Tineco: In terms of the market and industry maturity of the ground cleaning category, the European and American markets are still the main positions.
EqualOcean: What are the different business strategies for the European and American markets and Emerging Markets ?
Tineco: For Europe and America, we adopt a refined strategy. We established subsidiaries in the United States and Germany early on to oversee the operations of e-commerce channels and engage in negotiations with offline retailers. The analysis and review of business data are typically conducted on a weekly basis, while during major promotional periods, it is done on a daily basis. As for emerging markets like Asia-Pacific and the Middle East, we tend to rely more on external capabilities, such as leveraging local distributors and agents to penetrate the market. This represents a strategic choice in resource allocation between these two directions.
From a product perspective, we did not deliberately segregate different markets. However, from the results, there are still significant differences in consumption habits between developed countries and Emerging Markets . High-end products perform significantly better in Europe and the United States, while cost-effective products are more attractive in Emerging Markets.
EqualOcean: How do you define the difference between "home appliance brand" and "smart technology brand"?
Tineco: In my opinion, the difference between these two concepts may not be significant at present. In recent years, there has been increasing convergence between traditional home appliance companies and emerging technology companies. Many leading home appliance companies are also focusing on smart technology, technological advancements, and small household appliances. The entire industry is increasingly centered around addressing various life needs of consumers and their households, with different categories merging to provide consumers with a more comfortable experience. I believe this is a positive trend.
EqualOcean: How to build a technological and intelligent brand positioning?
Tineco: Internally, we have a concept called "Everyday Tech" which refers to the technological sense that our products bring to consumers, being both perceptible and easily understandable and mastered. Even consumers who are not sensitive to technology can easily use our products based on the operating instructions, making their daily lives more convenient. This is the brand image that we continuously convey to consumers, and this concept is also integrated into all touchpoints of Tineco's comprehensive sales channels.
EqualOcean: What are Tineco's brand marketing strategies overseas?
Tineco: Due to the market being in an emerging stage, our marketing focus has been primarily on conversion and sales-oriented advertisements in the past few years. Currently, Tineco has achieved a certain level of sales and brand recognition in the international market. Simultaneously, we are also prepared to make efforts in the vacuum cleaner category, aiming to obtain a larger share in the existing market. Considering these factors, starting from this year, we plan to gradually increase investment in brand direction to further enhance brand awareness and driving force as we move towards the next stage.
EqualOcean: At the same time, there are many brands of floor scrubbers and smart cleaning appliances going global. How can Tim stand out?
Tineco: Regarding our experience in expanding overseas, we have been constantly summarizing, reviewing, and improving. Fundamentally, as the pioneers in the floor scrubber category, we believe that it is our responsibility and conviction to constantly break through ourselves, lead the industry in advancing direction, and work together with friendly competitors to expand the market.
Against the backdrop of the common development of the industry, Tineco aims to continuously move forward while maintaining its first-mover advantage and constantly surpassing itself. Initially, our products ventured overseas, and soon after, we established subsidiaries in North America and Europe to deeply cultivate localization. During the early stages, when domestic counterparts had not caught up and overseas competitors were not as innovative and fast in product iteration as us, we naturally established a first-mover advantage. However, we did not stand still. Our overseas team began early engagement with large offline channels, demonstrating our determination and patience through long-term communication with channel partners. Returning to the essence of product innovation, we have the confidence to say that we have always been at the forefront of the industry.
The second experience we have summarized is to focus and concentrate. We chose to establish subsidiaries and a new brand, and with an "All In" mindset, we invested in the polishing and promotion of new product categories, allocating ample resources and focus. This ensures that we can make faster progress in the field of floor scrubbers.
Currently, we maintain frequent communication with diligent and innovative friendly competitors, exploring technological and marketing paths together. This is also aimed at collectively capturing the global market for floor cleaning with the collective image of Chinese brands.
EqualOcean: Ecovacs practiced a path of "from foreign trade to brand, from export to global" in the early days. How does Tineco currently gain insights into the broader and more diverse global consumer demands?
Tineco: Since its inception, Tineco has been concurrently operating in both domestic and overseas markets, with demand inputs for research and development synchronized from both sides. In terms of organizational structure, we are currently divided into four major regions: Europe and North America, the Middle East, Central Asia, and the Asia-Pacific. The market demands of each region are taken into account. This is why, despite the highly competitive floor scrubber market in China, we have identified vacuum cleaners as an important growth point, based on the insights from the teams in the Europe and North America region and the local market conditions. Furthermore, domestic consumers may not be familiar with it, but Tineco actually has a "carpet cleaner" that sells well in the Middle East region. Almost every household in the Middle East has carpets, and vacuum cleaners cannot achieve a satisfactory cleaning effect. It costs several hundred dollars to send them for cleaning once a year. After recognizing this situation, the local team proposed relevant product development requirements. In the kitchen appliances category, we have developed a smart toaster specifically for the European market. It allows users to set the desired state and texture of the toast, offering greater convenience than traditional toasters. The design also caters to local preferences, presenting a minimalist and luxurious style. Therefore, we are not pursuing a one-size-fits-all approach for global markets. This innovation based on organizational adaptation is also an advantage of our new brand. Moreover, "localization" is to some extent one of the barriers for global companies expanding into overseas markets. The model of selling products from China to overseas markets faces various challenges that cannot be compared to a localized approach.
EqualOcean: What is the composition of the international team?
Tineco: In the major markets of Europe and North America, the international team is primarily composed of local staff.
EqualOcean: Is this going to be a challenge for team management?
Tineco: Advantages and challenges coexist. The advantage lies in the smooth communication and brand marketing planning with local channel customers, thanks to the presence of local staff. The challenge, however, lies in the ideological differences between the local staff and us, creating a barrier in our communication. In addition, the impact of time zone differences further hampers the efficiency of communication between the domestic and overseas teams.
As we reach a certain level of business volume, we are also contemplating how to further transform and optimize our organizational and management structure as a global company. Currently, we are beginning to explore the appointment of domestic or local Chinese individuals as top executives or second-in-command in certain countries. The ideal situation would be to have management personnel who are familiar with Chinese communication styles, fully understand the headquarters' strategic direction, and possess local life experience to effectively manage the local teams.
If we engage in online communication between domestic and overseas local executives, we need to overcome multiple barriers such as language, time, and thinking differences. However, through such arrangements, we can address the communication differences between the domestic and overseas teams proactively, ensuring that both sides have real-time "collisions" and reducing communication costs.
Regarding the issue of localization for Chinese companies expanding overseas, it is difficult to determine the best solution so far, and we are still in the process of exploration. The optimal proportion of Chinese and foreign employees within overseas teams is a dynamic optimization process without a standard answer. Overall, as more companies go global, this is a highly worthy subject of research.
EqualOcean: Some companies adopt the "local people manage local people" model. Besides the communication barriers between local executives and headquarters, are there any other problems?
Tineco: We have previously tried employing local elites as the sole leaders in Latin America and Southeast Asia, but later found that the lack of organizational discipline could also occur among them. In extreme cases, these individuals may only spend one or two days a week in the office, resulting in chaotic local team management and difficulties in achieving business goals. However, their PowerPoint presentations for reporting to the headquarters are "impressive." It was our domestic business leader who discovered this situation when visiting the local offices.
At that time, we conducted discussions on this matter and found that during the early stages of China's reform and opening up, when foreign capital flooded into the country, it was common for companies to send executives from abroad. Even now, the proportion of foreign companies using Chinese individuals as their top executives remains low. However, the majority of companies are Chinese-owned.
On the other hand, looking at Chinese companies that ventured overseas earlier, such as Huawei, ZTE, or state-owned enterprises engaged in infrastructure projects, they would mobilize a large number of Chinese employees systematically for each country they entered. Not only high-level executives, but also middle-level and even grassroots employees would be Chinese.
We are also pondering why foreigners can manage thousands of employees in China, while we have to mobilize a large number of employees and incur high costs when we go abroad. We are still exploring a reliable path. Based on past experiences, finding reliable local employees, or even leaders, is still quite challenging, and luck may also play a part.
In my own opinion, for emerging markets, it is still more inclined to send a Chinese executive as the "top leader" while simultaneously finding a reputable and resourceful "co-leader" or "second-in-command" locally. This "1+1" arrangement has a higher success rate and stability. Of course, this approach also incurs higher costs, requiring the company to have a certain level of business volume.
EqualOcean: In addition to talent and management, what other challenges does Tineco face when going overseas?
Tineco: I believe the biggest challenge lies in brand recognition. Currently, at our stage, the pressure in this aspect is not too significant. However, as we reach a certain scale and continue to move forward, building brand recognition will undoubtedly present a major gap. In terms of product strength, whether it is floor scrubbers or vacuum cleaners, we are on par with global top brands in terms of product quality and innovation, which are strengths of Chinese companies.
However, these international brands have invested hundreds of millions of dollars each year over the past few decades to build brand reputation. Without wanting to completely replicate this path, we still want to make the global consumers aware of the brand Stargen in a shorter period of time. This is indeed a challenging problem. But we unanimously agree that it is a question we must brainstorm and thoroughly discuss. For example, the mechanism of social media marketing in China is already well-established, with clear evaluation of return on investment (ROI). However, this is not yet the case overseas, and we are considering how to extend the proven marketing methods from China to overseas markets. In summary, the goal is to establish Stargen as a leading brand in floor cleaning through more effective strategies and reasonable investments.
EqualOcean: What are the global development goals for the next phase?
Tineco: We want to become the global leader in floor cleaning in the next three years, surpassing not only our brother brand Ecovacs, but also Dyson, the current industry leader.
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