Net profit surpasses Anker! Another big sale joins the "10 billion club"

While the revenue is considerable, the profits of several big sellers are leading the industry. Among them, Ecovacs's annual net profit is as high as 2 billion yuan. At a time when cross-border sellers are wailing about the decline in net profits, this is excellent!

One of the common advantages of several newly-promoted billionaire sellers is the strength of their products and brands. After years of persistence in "research, production and sales", they have all created well-known brands and become high-quality sellers with their own brands. Building corporate brand power has also become a consensus among China's top sellers going overseas.

With a revenue of 13 billion, Ecovacs made a net profit of 2 billion last year

Previously, Anker Innovations and Giant Star Technology respectively released their 2021 annual reports. The revenues of both companies exceeded 10 billion for the first time. Anker Innovations had a revenue of 12.5 billion and a net profit of 980 million; Giant Star Technology had a revenue of 10.9 billion and a net profit of 1.27 billion.

Recently , Ecovacs released its 2021 annual report , with its revenue also exceeding 10 billion for the first time, and its net profit even surpassed Anker.

In terms of revenue, Ecovacs increased significantly from 7.234 billion yuan in 2020 to 13.086 billion yuan, a year-on-year increase of 80.90% ; in terms of net profit attributable to shareholders of listed companies , it jumped directly from 641 million yuan in 2020 to 2.010 billion yuan, a year-on-year increase of 213.51%.

Ecovacs ' first quarter data for 2022 has also been released, and it also maintained a high-speed growth trend. Its first -quarter revenue was 3.201 billion yuan, a year-on-year increase of 43.90%; the net profit attributable to shareholders of the listed company was 424 million yuan, a year-on-year increase of 27.20%.

The annual net profit is 2.01 billion yuan. Calculated on a daily basis, Ecovacs makes an average net profit of about 5.5 million yuan per day . This money-making ability is truly enviable to its peers!

As the first domestic robot vacuum cleaner, Ecovacs has a halo. Since 1998, Ecovacs has led the development of a number of service robot products for household floor cleaning and environmental health, including robot vacuum cleaners, window cleaning robots and air purification robots.

Today, Ecovacs has become a leader in the global home service robot and smart living appliance industries, and the company's smart cleaning appliances have become a must-have for more and more families.

Based on consumers' home cleaning needs, Ecovacs has created two blockbuster brands - Ecovacs brand household service robots and Tineco brand smart life appliances. These two brands have built a dual-wheel drive business model of Ecovacs and Tineco.

In 2021, the total revenue of the two own-brand businesses of Ecovacs and Tineco reached RMB 11.847 billion, accounting for 90.53% of the company's total revenue, an increase of 14.57 percentage points from 75.96% in the previous year .

Not only that, the average price and gross profit margin of these two brands are also moving up further. In 2021, the company's comprehensive gross profit margin increased by 8.55 percentage points from the previous year to 51.41%, of which the comprehensive gross profit margin of its own-brand business reached 54.90%.

1. Ecovacs

In 2021, sales revenue of Ecovacs brand service robots reached RMB 6.71 billion, accounting for 51.28% of total revenue, an increase of 58.42% over the previous year.

The annual report shows that the company's Ecovacs brand service robots shipped 3.404 million units in 2021, a year-on-year increase of 10.81%. The average shipment price was 1,963 yuan, a year-on-year increase of 43.67%. The product gross profit margin increased by 1.92 percentage points compared with the previous year.

Among them, high-end product revenue accounted for 91.0% of the brand's total revenue , an increase of 10.3 percentage points year-on-year. The sales share of products with a retail price of 3,500-6,000 yuan increased significantly, from 5.11% in 2020 to 41.33% in 2021.

Judging from the development of the household service robot industry where the Ecovacs brand is located, the global sweeping robot market size reached US$5.3 billion in 2021, a year-on-year increase of 18%. According to China Market Research's China Retail Data Monitoring, in 2021, the scale of China's sweeping robot market reached 10.8 billion yuan, a year-on-year increase of 22.2%. China surpassed the United States to become the world's largest market, with retail sales accounting for 32% of the global market, a year-on-year increase of 3 percentage points.

In terms of product price range, the domestic 5,000 yuan+ market in 2021 was basically driven by Ecovacs, and the Ecovacs brand's share of online 5,000 yuan-6,000 yuan market retail sales reached 99.6%.

According to retail sales statistics, the online market share of the top four brands in the Chinese market reached 84.9% in total , and the concentration of leading brands continued to increase. Among them, the online retail sales share of Ecovacs brand sweeping robots in the Chinese market was 43.5%, and the offline retail sales share was 86.6%.

2. Tineco

In 2021, the Tineco brand achieved sales revenue of 5.137 billion yuan, accounting for 39.25% of total revenue, an increase of 307.97% over the previous year. This year, the total shipments of the Tineco brand reached 2.671 million units, an increase of 242.45% over the previous year, and the average shipment price reached 1,923 yuan, an increase of 19.13% over the previous year. The product gross profit margin increased by 2.49 percentage points over the previous year.

The smart cleaning appliance industry in which Tineco is located has promising development prospects. In 2021, the domestic market sales of cleaning appliance products reached 30.94 billion yuan, an increase of 28.9% over the previous year. Among them, the market for smart floor scrubbers with sweeping, suction and mopping functions continued to maintain explosive growth, with the industry scale reaching 5.78 billion yuan, a year-on-year increase of 348.0%.

According to online monitoring data from AVIC Cloud Network, Tineco occupies 69.7% of the domestic online floor scrubber market .

Today, the two private-label businesses of Ecovacs and Tineco account for 90% of the company's revenue . The rapid growth of private-label brands has also successfully pushed the company's revenue to a new level of over 10 billion yuan.

Strong product strength drives Ecovacs to the world

While the proportion of the company's own-brand business has increased significantly, the product structure has also been continuously optimized, leading the development of high-end product technology in the industry and driving a significant improvement in the company's overall operating performance.

Among them, the new DEEBOT T9 series launched by Ecovacs has once again refreshed the industry's perception of sweeping robots . The new product is not only equipped with aerospace-grade dToF navigation technology, but also the industry's first AIVI artificial intelligence and visual recognition system, which is at the leading level in the global sweeping robot industry .

In 2021, the company's newly launched products contributed a total revenue of 44.8% of the company's full-year own-brand revenue . The high-end new products in 2021 accounted for most of the brand sales share during the Double Eleven period, among which the X1 series products ranked first in terms of omni-channel transaction value and transaction volume. TINCO FW floor scrubbers also ranked first in omni-channel transaction value in the floor scrubber industry, with a market share of 70%.

( Photo source: Ecovacs official website )

Ecovacs continues to lead the industry in core technologies such as mapping navigation, obstacle avoidance, and cleaning, involving sweeping robots. At the same time, it continues to innovate product functions and continuously expand the functional boundaries of household service robot products including sweeping robots.

Compared with its peers, one of Ecovacs' biggest advantages is self-production. The proportion of its self-produced service robots has increased year by year, reaching 98% in 2020.

At present, many of Ecovacs' products have won a number of world-class awards including the German Red Dot Award.

Strong product power has made Ecovacs a brand force. Today, Ecovacs has occupied nearly half of the domestic market share, and has successively established sales subsidiaries in Germany, the United States, and Japan, successfully opening up markets in more than 80 major countries and regions around the world .

Today, the overseas market penetration of sweeping robots still has room for improvement. It is estimated that the North American market size will reach a CAGR of 12% in the next ten years . Ecovacs' international layout is promising! The company's business network now covers major markets around the world, and has established a complete online and offline sales channel.

In addition, the proportion of sweeping robots in the category of cleaning appliances is also increasing, and the growth rate of sweeping robots in 2020 was higher than the overall growth rate of cleaning appliances. It is expected that the proportion of sweeping robots in cleaning appliances will continue to rise.

According to the market share data of Amazon in the United States, Tineco had a market share of only 0.1% when it entered the US market in May 2018, but it jumped to 12.9% in February 2019, making Tineco the second largest mid-to-high-end vacuum cleaner brand on Amazon. In the 10 months of sales, Tineco received five-star reviews from nearly 70% of users on Amazon US.

As early as the 2016 Amazon Black Friday shopping season, Ecovacs' sales ranked first in the sweeping robot category and fourth in the kitchen furniture category.

In the three years since the Tineco brand went overseas, its star products, the Fuwan series and the Piaowan series, have continued to gain recognition from overseas industry associations and authoritative media, and have won the CES 2022 Technology Innovation Award, the first place on the U.S. Consumer Report's 2022 Best Vacuum Cleaners list, and other honors, gaining recognition and attention from local consumers.

In May 2021, Kantar and Google jointly released the 2021 Kantar BrandZTM Top 50 Chinese Global Brands list. Since 2018, the Ecovacs brand has been on the list for four consecutive years.

In the future, Ecovacs will further increase its investment in overseas markets, improve product structure, optimize channels, expand regional markets, and promote the continued rapid growth of overseas revenue scale.

Last year, Ecovacs was not the only company to have revenue of over 10 billion yuan. Anker Innovations and Giant Star Technology also broke through this barrier for the first time and completed their advancement. As sellers with revenue of over 10 billion yuan, what do they have in common?

OEMs turn around and enter the 10 billion club

Currently, Ecovacs is a leader in the home appliance industry, with a considerable market share in home appliances such as sweepers and floor scrubbers. However, before this, Ecovacs was often referred to as a "OEM factory".

In addition to Ecovacs service robots and Tineco smart home appliances, another business of Ecovacs is OEM for cleaning appliances. In the more than 20 years since its establishment , Ecovacs has provided OEM/ODM services for internationally renowned cleaning appliance brands, and its manufacturing level has been gradually improved. The long-term accumulation has laid a solid foundation for the company's development and innovation in the cleaning field.

Another billion-level seller, Superstar Technology, is exactly the same as it, and it is also a typical example of the transformation of a foundry.

As a big seller in the tool and storage cabinet industry, Giant Star Technology's main products include four categories: hand tools, power tools, laser measuring instruments, and storage cabinets. They are mainly used in home residential maintenance, construction projects, vehicle repair and maintenance, map measurement and mapping and other fields. Among them, home construction and related repair and maintenance industries account for the highest proportion of application channels.

In 2021, Giant Star Technology achieved revenue of 10.9 billion, a year-on-year increase of 28%; net profit attributable to the parent company was 1.27 billion, a year-on-year decrease of nearly 6%. Among them, the fourth quarter revenue was 3.2 billion, a year-on-year increase of 43%, and the net profit attributable to the parent company was 120 million, a year-on-year decrease of 53%. Giant Star Technology has thus joined the 10 billion sellers club.

The first quarter report card of this year has also been released. Giant Star Technology achieved a revenue of 2.88 billion, a year-on-year increase of 45%; the profit attributable to the parent company was 180 million, a decrease of nearly 30% compared with last year. The increase in revenue and the decrease in profit are also a "common problem" in the industry in the first quarter. However, Ecovacs' net profit in the first quarter increased by nearly 30% year-on-year, successfully outperforming the market.

The fact that Giant Star Technology and Ecovacs have joined the ranks of billion-dollar sellers is largely due to their own supply chains. For cross-border e-commerce companies, having independent production capabilities is like adding wings to a tiger, and Giant Star Technology and Ecovacs have fully experienced the blessing of this advantage.

Take Ecovacs as an example. Based on years of experience in intelligent manufacturing, it has strong control over costs, quality and production capacity, providing strong support for product quality and high cost performance. Ecovacs introduced that the company's products are basically all self-produced, and it has strong bargaining and supply chain integration capabilities by virtue of its scale advantage.

Since smart products are updated and iterated quickly and are highly non-standardized, the products launched in different overseas markets also have different designs and certification standards. Therefore, it is very important for Ecovacs to have independent production capacity to flexibly and efficiently adjust the production of multiple categories and multiple SKUs. In the face of market changes, Ecovacs, which integrates R&D, production and sales, can also respond quickly.

Giant Technology is not inferior either. It has 21 production and manufacturing bases around the world , has established a global supply chain management system with China as the core, and has established cooperative relationships with thousands of suppliers around the world. This ensures that the company is not limited to its own production capacity, can respond quickly to market demand, and deliver various large orders in a timely manner.

Anker Innovations' business model is different from these two. Its competitor Huabao New Energy mentioned in the report that Anker Innovations adopts a product supply model of "independent R&D design + outsourcing production", and all product manufacturing links are completed by outsourcing manufacturers. Due to the lack of independent production capacity, Anker Innovations' delivery capabilities are somewhat weak.

Every factory-type seller is an expert in supply chain, but the same cannot be said about their R&D capabilities.

In 2021, Giant Star Technology invested 310 million yuan in research and development, accounting for 2.8% of its revenue. The company has focused on non-hand tool products and started large-scale innovation in power tools, especially lithium battery power tools, and developed a large number of cost-effective products, which were put into trial production and trial sales through cross-border e-commerce channels.

Last year, Ecovacs' R&D expenditure reached 549 million, accounting for 4.2% of its revenue. This year, Ecovacs will continue to deepen the core technology of robot products, improve floor scrubber products, and continue to strengthen its technological barriers.

This year, Anker Innovations' R&D investment reached 778 million yuan, accounting for 6.19% of total revenue, far ahead of other companies of the same size. As of the end of last year, the company had more than 1,600 R&D personnel among its more than 3,500 employees, accounting for 45% of the total number of employees. Such a huge R&D investment is very rare in the industry.

The specific level of R&D investment is also related to the R&D demand of the industries these companies are in. For Anker Innovations, strong R&D capabilities are a must-have skill, which is how it takes the lead in the rapidly changing smart charging market.

Building corporate brand power has become a consensus among top sellers overseas

At present, after several years of persistence in "research, production and sales", Ecovacs and Giant Star Technology have both created well-known brands and become high-quality sellers with their own brands.

Companies with OEM experience pay more attention to the development of their own brands. For example, Li Feng, vice president of Giant Star Technology, said: "Since we have our own R&D team and production base, why don't we create our own brand? We have no bargaining power when selling to OEMs, and we only make money when we sell a batch. If we lose orders, we lose business. If we create a brand, it is our own and others cannot take it away."

The WORKPRO and PONY JORGENSE brands of Giant Star Technology are also growing continuously. Last year, the sales revenue of its own brands reached 3.8 billion yuan for the first time. The brand advantage not only enhances the international competitiveness of the products, but also effectively improves the company's gross profit margin and business stability, providing a guarantee for the long-term and healthy development of the enterprise.

Ecovacs has dual-brand drive of Ecovacs and Tianke, and will deepen this dual-drive strategy.

Next, in the Ecovacs service robot sector, Ecovacs will continue to expand the sweeping robot market, expand product lines, incubate new categories and products in the future, and refine product strength, enhance design, technology, and quality, consolidate core technology advantages and barriers, and realize AI closed loop. For example, through continuous multi-touch-point category education, the sales share and market share of window cleaning robots and air purification robots will be increased.

In the Tineco high-end smart home appliance segment, Ecovacs will continue to consolidate its leading position in floor scrubbers, focus on high-net-worth, high-quality people, and further expand and strengthen the floor scrubber category; and implement the Tineco + Uni dual-brand strategy, through the construction of the Uni brand, focus on expanding the sinking market, expanding young people such as Generation Z, and covering a wider consumer group. The company will also focus on launching Shiwan 3.0 in the field of gourmet cooking, creating a more comprehensive smart cooking software and hardware and food delivery ecosystem.

In terms of brand building and market promotion, Anker Innovations is an industry benchmark. Some sellers said that the ultimate goal of domestic sellers is to build a Chinese brand like Anker by relying on their own product research and development capabilities.

According to Euromonitor International's report in November 2021, Anker's charging products have become the world's top third-party digital charging brand in terms of retail sales. Many mainstream media around the world have reported on Anker's products and brands, and hundreds of anchor channels on YouTube have released video review reports on Anker products. Anker's brand image has been established and is benefiting from the resulting brand premium.

This year, Anker Innovations will continue to increase its brand investment and build a global leading brand through omni-channel marketing. It said it will continue to strengthen and optimize brand marketing, keep up with the trend of changes in information dissemination methods, and continue to improve brand awareness and user reputation worldwide through its own brand marketing methodology on the basis of providing innovative products.

Anker Innovations, which is at the forefront of the industry, still attaches great importance to brand promotion. Ecovacs and Giant Star Technology also regard brand work as a top priority.

When Chinese brands go overseas, they should not just put trademarks on unrecognizable products and sell them on e-commerce platforms. Instead, they should make full use of the domestic supply chain, combine the consumption habits of the target market, provide consumers with appropriate demand solutions, and gradually root the brand in the minds of buyers in the process of expanding sales.

For sellers who are used to relying on third-party platforms such as Amazon to “sell goods”, they should not just sell “a certain type of product” on the platform, but should strive to make branded products with their own names, so as not to be disrupted by the platform’s policy adjustments. This is a difficult step, but also an important one.

Cross-border sales

Ecovacs

Tineco