Unable to resist the temptation, Japan's Rinnai has gone beyond the small and beautiful or top-heavy

Since the beginning of this year, Japan's Rinnai, which could not resist the temptation of China's vast market, suddenly broke away from the "small and beautiful" development track in the Chinese market over the past 20 years, seeking large-scale expansion and diversified expansion in business categories. From small and beautiful to big and beautiful, for all home appliance companies, it is a beautiful trap. With only brand power, but no differentiated product power, a complete channel system, and a combat-ready management team, many transformations are castles in the air.

Rinnai, a Japanese gas appliance company that has entered the Chinese market for 24 years, is standing at a new starting point for development in 2017. Seeing the continued growth of China's kitchen appliance industry over the past 20 years, as well as the benefits of the "coal to gas" policy subsidies from many local governments in China in recent years, it finally couldn't hold back its inner desires and impulses and decided to launch a new round of large-scale expansion in China.

Previously, Shanghai Rinnai General Manager Jinshi Keyan publicly stated to the media that Shanghai Rinnai would increase the sales of heating furnaces and heating systems to make them the second largest pillar industry of Shanghai Rinnai, and strengthen the kitchen appliance business to make it the third largest pillar. Shanghai Rinnai Deputy General Manager Chen Guangjie revealed that China has become the largest overseas market for Japanese Rinnai, and Shanghai Rinnai's sales account for 10% of the total sales of the entire Rinnai Group.

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Specifically, Rinnai's expansion in China focuses on two aspects: On the one hand, in terms of revenue scale, Rinnai hopes to achieve a sales target of 3 billion in 2019. In 2016, Rinnai's revenue scale was more than 2 billion yuan. In other words, from 2017 to 2019, Rinnai needs to achieve at least nearly 1 billion yuan of growth, which is not difficult for many Chinese companies, but it is not easy for Rinnai. After all, it took more than 20 years to achieve a revenue scale of more than 2 billion. If it wants to break through from 2 billion to 3 billion in three years, it is still unknown whether the resources and systems within the entire enterprise can support it.

On the other hand, in terms of business categories, Rinnai hopes to get out of the situation where gas water heaters were the only product in the Chinese market in the past. After strengthening gas water heaters and expanding heating stoves and system businesses, it hopes to "make up for it" in kitchen appliances such as range hoods and gas stoves, and build a three-horse effect of water heaters, heating stoves and range hoods and stoves. However, it is not easy for Rinnai to rely on the channels, resources and enthusiasm of gas water heaters to promote the development of kitchen appliance business and seize the market. Since last year, China's kitchen appliance industry has entered a round of reshuffles driven by giants and capital.

As a joint venture between Japan's Rinnai and Shanghai Gas Group, Shanghai Rinnai has both the craftsmanship of Japanese companies and the grandeur of Chinese local state-owned enterprises. In the past 20 years, its development has been slow but steady in the Chinese gas water heater market, and it has occupied a place in the Chinese high-end gas water heater market. In particular, as a Japanese company with a history of nearly 100 years, Rinnai has long adhered to the "craftsman manufacturing" model, and all the core components from the upstream are self-supplied, and even the product processing and manufacturing equipment are developed by itself, so as to ensure the reliability and stability of its quality. It has also become a high-end gas appliance brand trusted by many Chinese families.

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After entering the Chinese market, Rinnai successfully used the resources and background of Shanghai Gas to take the lead in opening up a niche in the gas water heater market. In particular, with the help of its background as a local state-owned enterprise, Rinnai has maintained a good cooperative relationship with many gas groups controlled by local governments and developed a competitive gas sales channel. After opening an account with a gas company, many users can receive information about Rinnai's water heaters, even range hoods, stoves and other products. However, with the younger generation of the entire home appliance consumer group, especially the rise of large platforms such as chain stores and e-commerce, the value of traditional gas appliance sales channels and platforms is gradually declining.

In this context, Rinnai is not only facing the pressure of further expanding and widening sales channels, but also the expansion of business categories. Otherwise, its past single category and revenue scale are not enough to support its "heavy asset investment" in the upstream from production and manufacturing equipment to parts and components, and the full self-production of complete machines. Therefore, since the beginning of this year, Shanghai Rinnai's new round of large-scale expansion based on category expansion is not only due to the opportunity in the Chinese market, but also due to the pressure of internal development and operation.

However, for Shanghai Rinnai, this round of category expansion and scale expansion is not destined to be smooth sailing. From a strategic point of view, Rinnai has developed to this day as a company that is not driven by scale, but by profit. As a representative of small and beautiful Japanese companies, Rinnai is not in a hurry to increase its revenue through large-scale expansion. Rinnai's scale expansion in the Chinese market this time is mainly due to the opportunities in China's kitchen appliance industry and the "coal to gas" policy opportunities of many local governments. However, when faced with sudden business opportunities and demand explosions in some industries and markets, Rinnai can only miss them and act as a spectator.

Secondly, from a strategic point of view, in the face of China, the world's largest home appliance consumer market, in addition to gas water heaters, kitchen appliances, and even home heating industries, although the market space is large, the competition is extremely fierce. Even in Rinnai's traditional strength of gas water heaters, it is now facing strong suppression from local Chinese companies. And the kitchen appliance industry such as smoke, stove and fire extinguisher has entered a new channel of in-depth reshuffle. According to Rinnai's operating model and rhythm in the Chinese market in the past 10 years, it cannot become a pioneer in market opportunities, but only a follower. Even if it obtains a part of the market cake through brand pull, it will not be too big;

From the perspective of competition, Rinnai is a company that focuses on high-end quality household products. In the past, it relied on slow and steady growth in scale and profits. However, in the face of China's rapidly turbulent business environment, Rinnai's past experience has always been in the field of gas water heaters, which is relatively independent of kitchen appliances. Therefore, how to enter the kitchen appliance market from water heaters is not to simply move Japanese kitchen appliances to China and sell them to Chinese families to grab the market share. This has long been proven to be a dead end in the past 20 years.

More importantly, for Shanghai Rinnai, although it has maintained a relatively obvious differentiated competitive advantage in China's high-end gas water heater market for more than 10 years and has become the spokesperson for high-end gas water heaters, its life has become increasingly difficult in recent years under the successive attacks of a large number of local companies such as Haier and Midea. Instead of continuing to guard this piece of the high-end market, it is better to take the initiative to deal with the possible impact of the giants.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.