Benefit from development of IoT (Internet of Things) and 4G, smart locks market in China has boomed in the past three years. Thousands of startups have emerged to design and produce smart lock products, and these companies provide homogenous products.
Youdian Tech, one of China’s typical smart lock startups, has attracted much public attention as it completed Series B financing of CNY 700 million (USD 101.36 million) from Alibaba in January. Founded in 2014, the company used to explore several IoT scenarios and it started to focus on smart lock gadgets in 2017.
Last week, EqualOcean conducted an interview with MENG Qinhai, the CEO of Youdian Tech, and got an overview of the company as well as this prosperous market.
Key takeaways from the interview
According to MENG Qinhai, more than 1,500 companies debut over 3,000 smart lock brands. Close to half of them produce shoddy products, which probably face bankruptcy this year.
No lock is impossible to be opened. What smart lock firms do is to employ new technologies to make the lock more difficult for thieves to pick.
Smart lock’s price ranges from CNY 1,500 to CNY 1,800 in retail market, while it is CNY 500 to CNY 1,000 in 2B business market, and the price is as low as CNY 500 in apartments market.
Youdian Tech is developing three-dimensional facial recognition technology, which will be adopted to a new type of smart lock.
EqualOcean: What’s the reason for Youdian Tech to focus on smart lock business from 2017?
MENG: We used to search for a specific smart home component with strong market demand, and lock is what we want exactly.
Although lock doesn’t draw much attention from the dweller, it is an undoubtedly basic gizmo for home security. Compared with brand new intelligent products emerged these years like drone, VR glasses and some smart wearable devices, smart lock is much applied.
EqualOcean: As we know, Youdian Tech has five smart lock products, C1, C2, E1, C1N, M2. What’s the difference among them?
MENG: They have similar functions, but different appearance. For instance, M2 looks more fashionable to fit young taste. Besides, these five types of smart lock are applied for different kinds of door.
EqualOcean: Among these products, M2 has the best performance in the market. What makes it stand out?
MENG: M2 is our first smart lock with automatic push-pull structure, which is more convenient than the traditional ones. Users can open the door by fingerprint recognition, and they needn’t push or press the door handle.
The whole body of M2 is made of stainless steel with high density, which is capable to withstand strong impact. The chips M2 adopt support encryption function, commonly used in banks, which can avoid hacking. In addition, M2 can connect with a mobile application. Users can check the battery, alarm from forced picking and other information from the sensors on the lock.
In October, M2 participated in crowdfunding organized by Xiaomi youpin – an online shopping platform owned by Xiaomi – and raised CNY 11 million within 14 days. M2 has become a part of Xiaomi’s smart home ecosystem, where M2 can connect with other smart home devices and Xiaomi’s central control system.
EqualOcean: What kind of new technologies do these smart locks employ? Does Youdian Tech have any exclusive technology?
MENG: The technologies that these smart locks adopt, like numeric password and fingerprint recognition technology, has developed about 10 year ago. So, it seems that smart locks are all similar in technology, but different in quality. For instance, the material that smart lock body uses influences how sturdy it is. And how many types of security test that smart lock has.
Thus, technology is not the major obstacle, but the vicious market competition is. There are more than 1,500 companies debuting over 3,000 smart lock brands. Close to half of them produce shoddy products with poor quality, and the price of them is much lower than other regular products. These spoilers bring bad image to consumers and they conduct negative impacts to the whole smart lock market indeed.
However, high quality will speak. These spoilers probably face bankruptcy this year.
EqualOcean: Who are your target customers?
MENG: We mainly sell our products to consumers, and most of them come from first-tier and second-tier cities in China. We start our 2B business in this year to cooperate with hotels and apartments.
EqualOcean: What do you think the key motivation for consumers to purchase smart locks?
MENG: On one hand, people all want to protect their valuables from stealing, so smart locks can help with it. On the other hand, many consumers buy smart locks for their parents to keep them from dangerous. Some people settle down in different places from their parents', so they hope smart lock can keep home safe, as well as show home situation in real time through internet.
EqualOcean: Besides selling them, you also need to provide installing service for consumers. So how do you manage it?
MENG: We have more than 100 agents in different provinces, and they have locksmith team to install the smart lock. These locksmiths always provide good service and their consumers is more likely to recommend the products to others. If recommends successfully, locksmith gets dividend.
Some smart lock companies cooperate with home appliance manufacturers, who have their own service teams. But they won’t get dividend from recommendation. Word-of-mouth communication is an important sales channel, so we prefer to organize our agents team.
EqualOcean: Do you have any plan for new products?
MENG: We are developing a new type of smart lock with three-dimensional facial recognition technology. It can further improve the safety of home, and it is so convenient that users can open the door without touch anything. In addition, we plan to design a smart lock with multiple identification method.
EqualOcean: What do you think about the future of smart lock market?
MENG: Low quality smart lock products exist because there is no standard and criterion in this industry. Several government departments and industry associations are designing the standard, including Ministry of Public Security, Ministry of Industry and Information Technology and China Lock Industry Association.
Youdian Tech is a newcomer in lock market, so we learn and communicate with many old players, such as KAADAS, DESSMANN, LOOCK and so on.