Yeelight's intelligent products set for 'explosive growth' as overseas strategy clicks

For traditional lighting companies, the ups and downs in sales are closely related to the cyclical changes of the property industry. But for the smart lighting industry, sales surge can be largely attributed to the proliferation of artificial intelligence speakers.

These insights are from Jiang Zhaoning, founder of the Qingdao-based smart lighting solutions provider Yeelight. Founded in 2012, it saw a spike in its business four years ago, when the AI speaker industry surged globally, especially in mature markets such as the ones in North America.

According to US machine learning technology provider Syntiant, the penetration rate of AI speakers in North America has exceeded 60 percent this year.

"Apart from playing music, users expect more from AI speakers, such as control of hardware by simply giving a voice instruction to the speaker. Turning lights on or off via the speaker is one of the most frequently demanded function, which settles a lot of domestic disputes," laughed Jiang.

In the last eight years, Yeelight has shipped more than 30 million products, including smart Wi-Fi LED light strips or smart LED bulbs to users in more than 200 countries and regions. Up to 30 percent of its users own more than one Yeelight product. For an overseas user who lives in a house, he may have more than 400 Yeelight devices, a number that is "way beyond the company's expectations", said Jiang.

But the robust growth was somehow held up earlier this year. Global logistics services were stranded due to the COVID-19 pandemic from February to April. Yeelight's orders from overseas markets contracted 30 percent year-on-year during the three months.

As the pandemic was contained, demand from overseas markets started to show a V-shaped recovery in May and positive growth was recorded one month later, said Jiang.

"The period from Thanksgiving to New Year's Day is usually our peak season in the overseas markets. Sales contracted in the first six months of this year and we are thus unable to double our sales revenue this year, which was the sales target set at the end of last year. But since the business is back on the right track, we are confident that we will see our overseas turnover grow by 50 percent this year," he said.

Yeelight started its outbound strategy in late 2018. E-commerce platforms such as Amazon are the main gateway for Yeelight to enter the European and US markets. As Jiang explained, the high efficiency of the e-retailers can help the company to reach its target consumers rapidly.

This is also the main reason that Yeelight reaped 100 million yuan ($14 million) in sales revenue in the overseas markets in 2019.

But Jiang believes that presence in physical stores is vital, especially for a brand aiming at overseas consumers.

"Consumers in Europe and the United States are still used to shopping in brick-and-mortar stores, where they get most of the brand recognition. We have to respect the status quo of the mature overseas markets. We have to adjust to the local market rules by adapting our products, pricing, and distribution strategies," he said.

Therefore, its strategy in the overseas markets remains unchanged this year despite the epidemic, which is to get more deeply rooted in the key markets such as North America, Japan, South Korea and Russia. The purpose is to fully explore the major distribution channels in these markets so that Yeelight can seek "explosive growth", Jiang said.

Meanwhile, the company is also tapping into the Middle East and South America where it has zero presence at present. A dealers' network built up in the first place will help secure rapid growth in the future, he said.

Yeelight has subsidiaries in North America and the German-language region in Europe to carry out localized operations. Regional dealership is the model that it adopts in other areas. The basic principle is to find the most suitable development model by making more attempts, said Jiang.

Yeelight has become increasingly better known in China over the past few years. In a smart lighting white paper released by the Shanghai Pudong Smart Alliance in December 2019, Yeelight was rated the second favorite smart lighting brand among Chinese dealers and consumers, only second to the Chinese industry giant Opple Lighting Co Ltd while dislodging internationally highly celebrated brands such as Philips.

But when it comes to overseas markets, the task of making the brand better known has been the 8-year-old company's biggest hurdle, said Jiang.

Having adequate number of active users in overseas markets has helped the company to win over local dealers. The ecosystem of Chinese technology giant Xiaomi, which Yeelight joined in 2014, has also helped a lot.

"A large number of overseas users have come to know for the first time that Chinese products can be cheap and of good quality at the same time. Consumers build trust on the products sold on Xiaomi's platform, which has helped Yeelight to become better known overseas," said Jiang.

Teaming up with the right overseas partner has been part of the company's go-global strategy. In 2017, Yeelight connected all its products to the Google Assistant system－the AI-powered virtual assistant developed by Google. While there were only 28,000 users connecting Yeelight devices to Google Assistant in 2018, the number jumped to 350,000 in the first half of this year, a growth rate considered the fastest for all platforms working with Yeelight.

"For a startup brand like Yeelight, working with international behemoths with a large user base and huge market appeal will make us better known more rapidly," he said.

Overseas markets accounted for 10 percent of Yeelight's turnover last year. This figure will exceed the share of the domestic market in the future, Jiang said.

For Jiang, the logic is quite simple. Whether the consumers are based in Japan or the Middle East, their demand for technology products is more or less the same. Only minor changes such as the language of the operating system and local behaviors adaption are required when companies localize their products.

In this sense, technology companies are fundamentally international companies and an internationalized strategy is crucial.

"On the first day when the company was founded, we aimed at building Yeelight into a world leader of smart lighting. The outbound road is bumpy sometimes. But we have never changed our strategy," said Jiang.