Ecovacs and Roborock, China’s two biggest robot vacuum companies, both reported declining profits in Q3.
Photo from CFP
By YUAN Yingqi
Not so long ago, 2,000 yuan (US$280) was enough to get a robot to vacuum your floor. But this year, be prepared to pay as much as 5,000 if you want an upgrade.
Ecovacs and Roborock, China’s two biggest robot vacuum companies, both reported declining profits in Q3. Revenue increased in the first three quarters, driven by overseas sales, but with waning demand from overseas, neither has any chance of catching up to last year’s explosive growth.
Domestic robot vacuum revenue in H1 increased by 9 percent, thanks to price increases – the number of units sold declined by more than a quarter. Online sales from January to August, were flat, and the number of units sold fell by more than a quarter.
Both Ecovacs and Roborock have released new products this year to prop up prices. Both maintain gross margins close to 50 percent, despite materials costs. But tech companies (Xiaomi, along with a handful of startups) and traditional home appliance makers (Haier and Midea), have joined the market.
Roborock more than tripled its advertising expenses in Q3, with total marketing costs up by almost three quarters. Ecovacs are up by more than 50 percent.
Domestic sales of all cleaning appliances have been flat for two years. Given price increases – the average robot vacuum is up by 47 percent to 3,100 yuan this year – most companies have given up on “selling cheap and selling more,” instead looking overseas markets where spending power is higher. Last year, Roborock's overseas sales increased by 80 percent to 3.4 billion yuan, exceeding domestic sales for the first time. Ecovacs now gets about a third of its sales overseas.
The high inflation, high-interest-rate environment this year has made foreign customers reconsider their gadget-buying decisions. Overseas sales at almost all robot vacuum makers have either slowed or declined this year.