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Trade Talk: CEDIA China Expo 2011 Exposes Great Opportunities for Systems Integration (5/1/2012)

By Peter Aylett, Home Technology Associates

There is no getting away from the fact that we are living and working in difficult financial times. Whilst installers are largely shackled to working within their own countries, manufacturers have access to a growing number of emerging markets. The exciting opportunity with these markets is their growth relative to existing more mature ones.

With Europe on a very flat growth curve, CEDIA is rapidly increasing its activities in New World Order growth markets such as Brazil, Argentina, China and soon, India. It is estimated that within a generation, China will have approximately 1.4 billion middle-class consumers (Source - UN Population Division & Goldman Sachs). This puts it on a growth curve that makes the country by far the most exciting opportunity for the growth of the global residential integrated technology market. To help facilitate this opportunity, CEDIA organised its first China Expo that took place in Shanghai from November 23rd to 25th 2011.

The opening of the inaugural CEDIA China Expo.

A promising start

I felt both privileged and thrilled to be invited to present at the show that was organised by the CEDIA Asia Pacific Team of Robin Cai, Lily Cai (both based in Shanghai) and Lauren Clegg and Stephen Miller (based in Sydney Australia) who all did a tremendous job of pulling off a world-class show. As anyone who went to the first ISE show in 2004 held in Geneva will have seen, first shows are difficult, with many companies sitting out the first year to see how the market accepts the show. The 2011 show was a great start with many exhibitors wanting to take more space for next year, and new exhibitors committing to a large presence for 2012.

Alongside the show was an education program delivered by Rich Green, James Chen and myself. We worked with a fantastic team of local CEDIA members who acted as our translators for the 15 courses delivered over the three days of the show. Topics ranged from understanding the Apple ecosystem and Airplay, to creating a robust functional specification.

Course held at CEDIA China Expo 2011.

The courses were well attended and very well received, and by spending this time with the local dealers I have come to the following conclusions about the Chinese integrated home technology market:

A/V centric

The current market is very orientated towards A/V. Many of the dealers I spoke to were installing very high-end product, but were not providing a unified remote control, being happy to leave the client the individual remotes. There is a huge opportunity here to embrace systems integration.

Speakercraft exhibit at CEDIA China Expo 2011.

Home cinema is a very aspirational luxury in China, with many companies saying that this forms the core of their business. Companies are sometimes reluctant to embrace product outside of A/V, as this is not within their comfort zone. Additionally, although the march towards IP convergence is as advanced as anywhere in China generally, many companies I spoke to did not have the necessary skills or knowledge to apply this revolution to the home.

The current market in China is very orientated towards A/V.

Big projects

There are some VERY large and high-value projects being carried out in China with most of the spend being on Audio and Video. Again, there is a big opportunity for both local dealers and global suppliers to increase the amount and scope of integrated subsystems in these projects. Lighting control, HVAC control, automated window dressings, access control, integrated security and enterprise-grade data networks are all under-exploited in the region.

Lighting control, HVAC control, automated window dressings, access control, integrated security and enterprise-grade data networks are all under-exploited in the region.

There was a real yearning for us to not only teach the technical aspects of these subsystems, but to also explain the compelling benefits to an end-user to help the dealers with their sales process. Certainly for next year we will expand our education curriculum at the show to embrace more courses on how to sell a particular subsystem.

New building

Although new building in China has decreased in the last 12 months, as with most countries globally, local developers are looking for ways to make their offerings more attractive to buyers. I had many opinions from local dealers that these developers are becoming more and more receptive to the idea of installing integrated technology as standard. The profile of these developments will certainly help educate the masses about the potential of integrated technology in the home.

Conclusion

There are some fantastic distributors in China who are technically very able and who understand the needs of the region. I urge any manufacturer who either does not have a presence in the region, or who is looking to increase its exposure to consider coming to the show next year. I would not be surprised if the show is three times larger in 2012 both in terms of exhibitors and attendees, and there was much talk about a show like this eventually transcending custom install to embrace the wider gamut of consumer electronics.

Any potential growth in Europe or North America pales into insignificance compared with current opportunities in China. In any market, the companies who get in first usually have the greatest success. 1.4 billion potential consumers are difficult to ignore!

Peter Aylett is a Director of Home Technology Associates, provider of consultancy, training and client advocacy for integrated technology solutions within the home.

www.hometechnologyassociates.com