Company

The Story of Deerma, a Chinese household appliance brand

If you’ve ever picked a cheap vacuum cleaner, humidifier or dehumidifier on AliExpress or Amazon, you may have noticed a brand called Deerma.

The design of this brand looks good, the quality is OK, but the price is very cheap. But when you search for Deerma in Google, there are few reports about it.

As you might guess, this is a brand from China, although they have been selling goods to markets outside China on a large scale since 2019. But like other Chinese brands, their overseas business is still in its infancy, so there are few stories about Deerma in the English-speaking world.

Deerma is a small household appliance manufacturer in China, founded in 2011. Compared with other Chinese electrical brands, such as Hisense, Midea and Gree, it is still very young. But in the past few years, it has made some achievements and is becoming more and more popular with consumers in China.

The main commodities of Deerma are called “small household appliances” in China, corresponding to “large household appliances” such as refrigerators, washing machines, air conditioners and televisions. Some changes have taken place in this market in the past few years. Let’s talk casually about Chinese small household appliances and Deerma.

What’s so special about Deerma?

Small household appliance is no lonnger a good business in China.

For example, when Deerma decided to sell fabric shaver, the annual sales of fabric shaver in the Chinese market had already reached 40 million units. This means that the market has been occupied. But no consumer can remember any fabric shaver brand.

They just buy some cheap products, at random. If the quality is bad, they will buy another one. These fabric shaver have no well-known brands, or even no brands. Even if the quality is not up to standard, the producer will not be punished. The whole market is in vicious competition.

Deerma wanted to change that, so instead of buying general design from the public market in the industry when they produced the fabric shaver, they designed their own fabric shaver from scratch. At the same time, they investigated the common fabric shaver in the market and improved several defects, which made Deerma’s product quickly stand out among similar ones.

Fabric shaver is just a microcosm, and they followed this strategy in every product that Deerma sold later. Deerma mainly sells humidifiers, fans, vacuum cleaners, dehumidifiers and juicers in China.

None of these product categories are as new as iPhone or Airpods, and they have been with consumers for decades or hundreds of years. As a result, many of the brands that produce these appliances are trapped in a never-ending price war.

But Deerma did not do so, trying to find flaws in these mature products that were ignored by other brands, and then make small improvements.

This is not an immediate strategy. Deerma does not get the first word-of-mouth and sales in each category. However, consumers are beginning to build trust in its brand, and when they buy appliances that are “not particularly innovatived”, they first check to see if Deerma is also selling the product.

Because Deerma is an electrical brand hatched from an e-commerce agency, it is better at using the Internet to find users’ problems than other traditional brands in this field.

To some extent, this is a kind of “brand compound interest effect”, and we have introduced the value of this in this analysis of SheIn. It is not another cheap made in China, that may disappear at any time, but a company that has been trying to maintain its brand reputation for a long time. This means that its quality will continue to improve and will not disappear after making a mistake.

The founder and Entrepreneurship Story of Deerma.

Deerma founder Cai Tieqiang was born in 1987 in Meizhou City, Guangdong Province, China.

Unlike many first-generation entrepreneurs in China, Cai’s family was already rich when he was born. Cai’s father, the first wave of businessmen in China, ran his own company before China fully recognized the market economy.

But this is not the fortune for Cai.

Because of his rich family, Cai Tieqiang was a bad student in school. He dropped out of school in the first year of junior high school.

But doing business in China is not a political risk, but a business risk. At the age of 15, when his father went bankrupt because of a failed investment, he was forced to leave his home and come to work in Shenzhen with a bag of clothes and 200 yuan (about $24 at the time).

Because he doesn’t have any skill, he can’t find any decent job.

During that time, he worked as an assembly worker in a factory, a waiter in a restaurant and a salesman in a stationery store. In a later interview, Cai said: “the only thing mattered at that time was to live, nothing else was.”

His job in the stationery store gave him a chance. Touched by his hard-working spirit, the owner of a printing factory hired Cai to become the first salesperson of the factory.

During his time working in the printing factory, he met a lot of designers, and he realized that there would be more and more products in China that needed packaging design and image design. So he decided to start a business— it was in 2006, when Cai was 19 years old.

Cai soon set up his own design company, Flying Fish Brand Design, which later changed its name to Flying Fish Group and established Deerma in 2011.

But initially, Flying Fish’s business was to help local Chinese companies design corporate image and brand visual image. In the process of carrying out the business, Cai came into contact with many local Chinese companies, and he quickly discovered crises and opportunities.

At that time, Chinese design companies were growing rapidly, and overseas companies were also entering the Chinese market. As a result, the market rapidly became crowded. But at the same time, China’s e-commerce and online shopping were growing much faster than overseas. Therefore, many design companies that directly learned from overseas experience could not meet the needs of online sales of Chinese enterprises.

In 2010, Flying Fish set up a subsidiary and began to do “e-commerce agent” business. This business model means that a manufacturing company authorizes the right to sell products on the Internet to a company with better e-commerce skills.

But soon, Cai realized again that helping other companies run online stores was not a permanent business. Because with the development of the Internet, selling goods online would become the most important or even the only sales model for many brands, which meant they could never outsource this part of the business to another company.

A year later, Flying Fish Group established Deerma. For the first time. They practised their brand design and online sales skills to their own products, and the Deerma brand was officially born.

Then, as mentioned above, Deerma quickly achieved success in the Chinese market. In 2018, Deerma wholly acquired Philips’ water purifier business. After that, it began to try to sell its goods overseas.

In 2020, 30% of its sales came from overseas markets.

References:
[1] Cai Tieqiang, chairman of Flying Fish Group: “Flying Fish” who has the courage to open up new markets
[2] Exclusive interview with Deerma CMO Li Junwei: living by the side of the giant

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