Supply chain
Commentary: Why smart thermostats have a limited market in China
Alex Wolfgram, DIGITIMES, Taipei
Wednesday 11 March 2015

Smart home applications are one of the major focuses as part of the ever-growing IoT industry in 2015 and there is much discussion over how to control and connect appliances such as thermostats, refrigerators and washing machines. In western nations where homes are built around centralized air and heating units, demand to reduce energy usage has been spurred largely because of the unnecessary costs involved with heating or cooling areas that are not occupied.

In China, however, the culture, design and architecture encompassing the residential sector is different, and local consumers manually control individual rooms, turning on devices such as air conditioners (AC) only when they are occupied. Housing in China, and most of Asia for that matter, are apartments and the concept of a western house almost does not exist in China and Taiwan due to property restrictions. This means that most homes are one level and each individual room typically contains its own external air conditioner that is built in to the wall as opposed to a centralized system that blows air typically from the floors.

For Chinese, air conditioners are turned on only when someone is occupying a room. That means if all family members are gathered in a family room then the AC in a bedroom, for example, will not be running. Not only are the Chinese concerned about saving costs, but they emphasize practicality. Hence, there is not a need to have a smart thermostat in the household that can detect when people leave and enter a room and therefore make changes to the temperature. This coupled with the tendency among Chinese to conservatively use ACs (if they even have one at all as most 3- and 2-tier city homes do not) reflects Chinese culture and also the way buildings and homes are designed.

Where smart thermostat makers may make a dent is in the industrial and business segments. While similar methods used in the home also extend into these areas, Chinese businesses are cracking down on energy savings and are beginning to see the benefit of allowing smart systems to control such tasks rather than leaving them to company personnel. Connectivity in China is growing and governments are actively pursuing investments that allow for energy reduction in the commercial segment. Beyond that, makers need to consider that not all western concepts will work in China and that the smart home industry in particular is a good example.

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