Qingdao in E China's Shandong province moves towards higher end of home appliance industry

Estimated reading time: 6 minutes

By Li Rui, People's Daily

When he prepared his supper, all he did was hitting a button on an intelligent steam oven. As he lied down on the bed, the air conditioner automatically set the temperature and airflow according to the data collected by his smart pillow, ensuring a comfortable rest during the night.

What brought this convenience to him was the smart home appliances manufactured by Haier, a multinational home appliances and consumer electronics company headquartered in Qingdao, east China's Shandong province, and this scene was exactly an epitome of the thriving intelligent home appliance industry in the city.

Qingdao is a major hub for advanced manufacturing in the home appliance industry. In recent years, there has been rapid growth in the number of companies involved in making higher-end, smarter, and more customized home appliance products and solutions.

Currently, there are over 2,200 such companies in the city, with 52 national-level research and development innovation centers and 17 national champions in manufacturing.

In a smart factory of Fisher & Paykel in Qingdao, motors were assembled and then shipped to a washing machine factory of Haier in the city.

Motor, a key component, is like the heart of a washing machine. As a company specialized in the making of home appliance motors, Fisher & Paykel has been a long-term component supplier for Haier. It set up a factory in Qingdao in 2015 under the assistance of Haier.

"This batch of motors all come with bar codes, which are their 'identity cards,'" said Wang Ziqiang, general manager of the washing machine factory of Haier.

"In the past, it cost a lot of time and energy to conduct full-process inspections for the goods from suppliers upon entering the factory," said Wang.

Relying on Haier's COSMOPlat industrial internet platform, Fisher & Paykel established a smart factory that enables massive and customized production based on customers' demands, he added.

All production data are visualized and accessible, which marked a digital upgrade of the quality assurance system, said Wang.

"With the assistance of Haier technicians, our production line has been optimized," said Sun Li, general manager of Fisher & Paykel Appliances (Qingdao) Co., Ltd.

Through this in-depth collaboration, Fisher & Paykel has reduced quality losses by 30 percent and increased the number of orders by 30 percent, according to Sun.

"This is an epitome of the synergy between the upstream and downstream sectors of the home appliance industry in Qingdao, "said an official with the Qingdao Municipal Bureau of Industry and Information Technology.

As the industry accelerates its clustering, chain owner enterprises play a leading role in connecting advantageous resources from both ends of the supply chain, driving the overall improvement in quality and efficiency for all companies along the chain, the offical said.

Control panel, as a key component of smart home appliances, used to be a weak link in the home appliance industrial chain in Qingdao.

"In the past, there was a lack of control panel manufacturers locally, so home appliance companies often had to purchase control panels from other places, resulting in high transportation costs and unstable supply," said Liu Dachuan, director of the Qingdao Municipal Bureau of Industry and Information Technology.

It was not just the control panel. In 2005, only less than 5 percent of the core components and electronic devices used in locally manufactured home appliances came from Qingdao suppliers.

To address this issue, Qingdao released an investment guidance catalog for key components of smart home appliances. The catalog highlights four major product categories and 18 subcategories as priorities for attracting investment.

Diehl Controls, an outstanding supplier of control systems in the global home appliance industry, has established Diehl Controls Qingdao subsidiary in the Qingdao Sino-German Ecopark, which  provides control panels and other components for home appliance manufacturers such as Haier.

"Sincerity is the greatest attraction," said Lyu Zhenyu, director of the investment promotion office of the Qingdao Sino-German Ecopark, explaining the secret to attracting foreign investment.

"We provide full-lifecycle services, from initial planning and site selection to project construction and operation," Lyu added.

So far, Qingdao has attracted a group of key component manufacturing companies, significantly increasing the local supporting capability for core components and electronic devices.

In an exhibition hall of a national high-end intelligent home appliance innovation center in Laoshan district, Qingdao, a number of premium home appliance chips were on display.

In the past, China's domestic chip industry was not yet fully developed. In 2019, Haier, together with its upstream and downstream partners, jointly established the national high-end intelligent home appliance innovation center.

The goal of establishing this center is not to build "fast cars," but to build "highways," said Gui Zhihui, deputy general manager of the national high-end intelligent home appliance innovation center.

Previously, from chip design, manufacturing, packaging and testing to application, upstream and downstream enterprises were not well connected. The chip products themselves also lacked standards that met the needs of the home appliance industry, as well as authoritative testing.

"Many home appliance and chip companies would send their chips to us for testing," said Gui. "With the data we have collected, we gradually made standards that meet the needs of the home appliance industry. Along this 'highway,' the entire home appliance industry of Qingdao can move towards higher-end and more intelligent development."

"By proactively addressing the pain points in the industry, such as high-end scenario chips, the Qingdao home appliance industry provides users with smarter and more convenient services. We believe that in the future, your home will understand you better," Liu noted.