Hisense establishes footprint in the UK market

Louis Hou, Managing Director of Hisense UK Limited [Photo by Cecily Liu / chinadaily.com.cn]

Chinese consumer electronics brand Hisense is making rapid inroads into the European market with a diverse range of products, championing the proposition of good quality and value for money.

In the UK, its revenue has rapidly grown from 8.5 million pounds ($13 million) in 2013 to 18 million pounds in 2014, and the projected revenue is 32 million pounds for 2015.

Despite being a young brand in the country, Hisense’s refrigerators are already the third biggest revenue generator in the refrigeration product group for the UK's leading Online retailer.

“We are growing fast because we have great products and we understand the needs of customers in the UK market,” says Louis Hou, Managing Director of Hisense UK Limited.

This year Hisense UK broadened its product range to include television, smart phones, tablets and washing machines. Some of Hisense’s TV products are currently manufactured in Eastern Europe through contract partners, but Hisense has plans to open its own factories in Europe in the near future too.

Hou says he believes all successful Chinese white goods products have three stages of international expansion, and Hisense is a perfect example of this process.

The first stage of expansion is producing as an original equipment manufacturer for Western brands, the second is selling own branded products overseas through partnerships with local distribution partners, and the third is to manage branding and sales overseas with a team of its own, he says.

And for Hisense, the third stage was reached in 2009 when Hisense restructured its European business, focusing on setting up subsidiaries in European countries that can dedicate efforts to marketing Hisense branded products.

This restructuring has led to the setting up of subsidiaries in Italy, Germany and Spain, followed by the UK in 2012 and France this year.

In the UK, Hisense entered the market by launching mid to high end refrigeration product under the Hisense brand and by maintaining entry level product sales by using the sub brand Fridgemaster, which Hisense aquired from a former UK distributor.

Hisense had been producing OEM product under the Fridgemaster brand for around 10 years. Obtaining the brand gave Hisense instant access to a sales network and therefore continued sales volumes.

“We knew the brand very well and we already knew the UK market very well through working with Fridgemaster, so we decided on the acquisition,” Hou says.

Hisense kept the Fridgemaster brand and continued to manufacture refrigerators for it, as an entry level brand, and then introduced its own branded refrigerators to the UK market as a high end brand, in what Hou calls a ‘dual brand strategy.

“After the acquisition, we realized it is a good business decision because we were able to grow the business much faster than if we grow organically and start from zero,” Hou says.

Currently there are about 35 models of Frigemaster’s products sold in the UK, ranging from 99 pounds to 299 pounds. Hisense’s branded refrigerators, in comparison, range from 359 pounds to 899 pounds, and come in 15 different models.

Hou says the Hisense refrigerators have great technology features and are very reliable. They are comparable to products from Bosch Siemens or Samsung, but are generally around 100-200 pounds cheaper.

Hisense established its partnership with Appliance Online in July 2013, eight months after it entered the UK market.

“They have never worked with a Chinese brand before, but they wanted to because they believe Chinese white goods brands would be world leading one day. Around 10 to 12 years ago they started working with Samsung for the same reason, so they trusted Hisense and our sales on AO has increased greatly since then,” Hou says.

In addition to AO, Hisense also works with Buying Groups, which consist of many individual retailers each buying from the same platform.

It has recently started a partnership with the retailer ASDA for its tablets, and is in discussion with John Lewis for television and refrigertors.

Currently Hisense have a range of two washing machines and ten TV products in the UK market. In addition to this they have three smart phones and two tablet computers. Most of these products have been added to the range during the second half of the year and will take a greater share of Hisense UK's sales revenue as time goes on.

Currently Hisense’s European headquarters is in Germany, where much of the research and development for its European products are done, especially for TVs and refrigerators.

Despite Hisense’s current success, the firm’s European expansion is not without lessons learnt the hard way. When the brand initially entered the European market ten years ago through partnership with French retailers, it built factories in France and Hungary to manufacture televisions, which were subsequently shut down because of insufficient sales to support them.

Hisense also sold products in North Europe at the time, as well as Germany and Australia, but mainly through distribution agents.

"We were going through a learning process at the time and because of this we now have a greater understanding of the European market," Hou says.

Hou is convinced that Hisense has established strong support in the UK market as a high quality brand that understands both retailer and consumer needs. "This is an excellent base for future growth," says Hou.

Hou has built a strong management team mainly consisting of British local employees. Howard Grindrod, who is assisting Hou in developing the UK business, has previously worked closely with Hisense as a buyer of OEM products.

"The most important task we had was to establish the integrity of the company and the management team. Going forward we need to ensure that retailers realise the value they're getting from our products." says Grindrod.