Kingclean Chairman Ni: A Formal Interview

When Kingclean released Mojie M12 Max, I had an in-depth exchange with Ni Zugen, Chairman of Kingclean Electrical Appliances, for more than an hour. In more than an hour of communication, Mr. Ni taught me a lot about the development of the industry and future trends. This article adopts a conversational style and expresses Mr. Ni’s understanding of the industry to the greatest extent.

1. Danny You: First of all, I am very grateful for giving me this opportunity to communicate face-to-face with Mr. Ni. Everyone knows that Mr. Ni is a legend in the vacuum cleaner industry. Many people are curious about some of Mr. Ni’s early experiences, including why he was able to make Kingclean so big. Today we will discuss some past experiences and see if they can give some inspiration to other practitioners.

We understand that you spent many years in the army in the early days, and later joined Chunhua as the person in charge of technology. Do you think your years in the army had any positive impact on your subsequent entrepreneurship?

Mr. Ni: Speaking from my personal experience, I grew up in a rural area. When I came back from school when I was 12 or 13 years old, I always went to the countryside to work in the fields. In that difficult environment, I developed my hard-working spirit. Later, I served as a soldier in the army for 13 years, where I received training and education. The army is an organization, and people must be trained and grown in the organization. The seniors of our revolution were ordinary farmers before joining the revolution. They grew up faster after joining the revolution. The actual environment allowed people to grow quickly.

In the past, we often talked about Mao Zedong Thought. Mao Zedong transformed the army and the party. Let ordinary people like us who join the army undergo ideological transformation. The environment of the army makes people progress and be positive. There is a saying in the army that a camp made of iron is like a soldier made of flowing water. Every year, the army evaluates soldiers. Those who perform poorly will be demobilized after two years, and those who perform well will have the opportunity to be promoted to officers. So in this case, you need to keep learning, stay motivated, and consider how to do your job well. When we were in the army, we were all very active. As new recruits, we all rushed to do dirty and tiring work, from cleaning in the morning to planting vegetables. The army has cultivated my self-motivation and dedication to work.

In addition, organizational discipline has been established in the army. We all complete our work in accordance with the policy requirements of our superiors. What we learned in the army is that we put the collective first, putting others before ourselves and public before private. Do your job well while always accepting this kind of influence.

I think the army also cultivates people who dare to take responsibility. This is not entirely about money. When I was in the army, my monthly salary was only 6 to 10 yuan.

The first year's salary was 60 yuan, I spent 10 yuan and saved 50 yuan. In 4 years, I accumulated a total of nearly 200 yuan. In the army, I developed a sense of honor based on hard work, plain living, and being proactive. I was an activist in the army, an activist who studied Chairman Mao's works, Chairman Mao's quotations, theory of practice, theory of contradictions, and strategic issues in China's revolutionary war. After studying, I wrote more than 100,000 words of notes on my experiences. Studying Chairman Mao independently in the army affects your world view, your views on problems, and how you treat others. So what I am saying is that the most training you get is through learning, through the education in the army to influence your views on issues, dialectical materialism, and the two-way approach. One is dialectical materialism, the other is the dichotomy of looking at problems, and the other is learning and practice. It is not just empty talk, you have to do it after learning. These have the biggest impact on me.

Being a civil servant back then was relatively easy, but I know what it will be like in 20 or 30 years. Therefore, among our group of demobilized cadres, most of them went to government agencies, industry and commerce, customs and other agencies and institutions. Only I went to enterprises. After I arrived at the company, the factory director asked me which office I wanted to work in. I said I didn’t want to go to the office, I wanted to go to the workshop. Wherever I was needed most, I would go there. The factory director said that motor production is not possible and he is currently engaged in technical research, but it has not been completed yet. Then I said I would go, and I went to the workshop and personally inspected every process and component, and worked as an engineer from scratch for 2 years.

1. Danny You: Is it equivalent to starting from scratch as an engineer?

Mr. Ni: I was a demobilized cadre in the army. I worked as a technical worker for half a year and five years as a political worker. Normally, demobilization should be a political worker in an agency. At that time, the country had begun reform and opening up, and I saw private enterprises in Zhejiang and Shenzhen flourishing. I want to learn something and learn some skills, otherwise I will be eliminated by society.

So I proposed that I would like to go to the enterprise and go to the workshop to do technical research in depth. I am the first motor localization engineer in China. At that time, more than a dozen factories in China bought advanced imported equipment, but they failed when they were made. Later, I personally went to the front line and through a large number of experiments and improved verification, it took me three months to solve this technical problem and even won an award.

Looking back now, I actually never went to college. I learned everything by myself and then applied it. When I arrived at the factory, I put the knowledge I learned into practice into practice. I have a very strong learning ability and have mastered science and engineering subjects through self-study, such as electrical engineering, automatic control, analog circuit lines, digital circuits, etc. Technical skills in these aspects also laid the foundation for subsequent development.

1. Danny You: Many people have the impression that Mr. Ni is very energetic. When he started his business, he would arrive at the company at six or seven in the morning and he would not stop until the evening. In the early days, we can actually understand it, because small companies in the early days required hands-on work. But later when you became so big and had so many industries, how did you continue to maintain these living habits? Does it have anything to do with your early military experience?

Mr. Ni: Eating bitter food has become a natural habit since I was a child. Personally, I don’t think it is bitter. If it is imposed, for a short-term goal (such as making money), your willpower will decline. I think that only having an ideal ambition and a love for a career can make people stick to it for a long time. When we started our business, for 10 years, we only had a few days off during the Spring Festival.

1. Danny You: Another point is that after Kingclean was established, it ranked first in the industry in two or three years, and it has been developing rapidly in the past 10 years.

Mr. Ni: We ranked first in the country in our second year of business. We made more than 50 million in the first year of starting the business. At that time, Chunhua had about 300,000 units, almost 100 million. The next year, the spring flowers were about 150 million, and we made 200 million, and suddenly became the number one in the industry.

1. Danny You: Looking back on the past 10 years, there seems to be no special obstacles in Kingclean. It is just very smooth and the growth rate is very high. What does it rely on? What decisions do you feel you made particularly right? For example, because there were many factories at that time, such as Ningbo Fidelity and Shanghai Happy, why didn't they start doing it?

Mr. Ni: Leading innovation. I think most companies are following others instead of considering what users and customers need before innovating. At that time, I was the first in China to reduce the cost of the motor from RMB 125 to RMB 80, and increase the performance and life span by 50%; the first Tornado high-volume vacuum cleaner, the first handheld high-power vacuum cleaner, and the first upright tornado vacuum cleaner. We made many industry firsts. Once a new product is made, it will achieve high sales. If others follow, they will always be a generation behind and their profits will continue to decline. So my idea is to develop customers through innovation and research, study what users need, and study what buyers need.

If you only care about the buyers and not the users, your business will not last long; if you only care about the users, the buyers will not make money. We hope that users will want to buy our products after using them, and that buyers can make money by selling our products. The concept we proposed at that time was to produce European-quality products at Chinese costs. In terms of product research and development, we have always emphasized three key points. The first is industrial design. Industrial design is like a person's appearance. When looking for a partner, you must look for something good-looking, and the industrial design of the product must be fashionable and futuristic.

The second is technological innovation to improve performance and solve user pain points.

The third is high quality, low maintenance rate, and high customer returns. Because the products are easy to sell and customers can make money, they become dependent on us. If you purchase from us because the price is cheap, you will end up with a lot of after-sales problems, which is unsustainable. Therefore, design, innovation and quality are indispensable. We are not a cost-leadership company, and we need to think about how to make the retail pricing of our products higher. For example, if the cost is increased by one dollar, the retail price can be increased by $10, so that both we and our customers can get more profits from it. If we are cost-oriented and the products are cheap and the gross profit is low, this will not be able to support the company's R&D and innovation, and it will be unsustainable.

1. Danny You: Have you encountered any difficult moments in the many years of Kingclean?

Mr. Ni: There is no stage in the development of Gram, including other areas of investment, that is so difficult that the sky is falling. The financial crisis in 2008 and the economic downturn in 2011 and 2012 made the environment difficult, but it was the same for everyone. This year the epidemic came and it initially had an impact on our sales, but now we have begun to resume growth.

1. Danny You: What you just mentioned is that the development of our Kingclean has many reasons, including the early stage, because there are many advantages in product positioning or research and development or motors. In terms of products, I learned that a lot of it is that you give a very clear direction, or give a more detailed idea, and then your team solves it.

Mr. Ni: I mainly give everyone a direction, and the specific work will be carried out by the team. It's equivalent to me giving the product idea and the technical team to implement it. When encountering technical bottlenecks, I will provide some guidance and experience to help.

1. Danny You: We have communicated with many friends who are engaged in R&D. Maybe because their exposure to things is relatively narrow, they will fall into the cost-based parameters you just mentioned. However, I feel that in the early days, what Kingclean did was to lead the development of the entire industry. Everyone is learning from Kingclean. I would like to know how you develop new products and achieve sustainable growth?

Mr. Ni: There are two directions: one is users and the other is technology. On the one hand, you need to gain insight into users’ consumption pain points or potential needs. Users will tell you they are dissatisfied with this or that, but relying solely on user market research can only know their dissatisfaction but cannot design and develop new products. There is potential demand in every industry, but this insight needs to be based on technological breakthroughs and continuous progress. The world is constantly progressing, and demands are constantly changing. At this time, we have always said that we should look at the world from a broad perspective. Look at the changes in the world and the direction in which technology is developing. Only in this way can we discover consumer demand and future potential. Innovation is not created by sitting in an office, but by catching the flash of inspiration through long-term observation.

1. Danny You: Is this a personal talent, or is there a methodology?

Mr. Ni: There is a methodology, but without inspiration, methodology alone is not enough. For example, the Apple mobile phone is a combination of mobile phone and computer, and then continuously improves and optimizes the user experience. For example, Motorola and Nokia definitely had no problems in management back then, but no one saw this direction for smartphones, so they fell behind step by step. As a latecomer, our R&D idea is that if someone does this first, I cannot follow. There must be another better solution.

For example, if Dyson makes a handheld vacuum cleaner, if we simply follow it, we can only be a member of the ordinary Dyson followers. We must find another way before we can succeed. During Dyson's more than 30 years of development, brand marketing has been his strength, and there is something we need to learn from this. From a product perspective alone, his product has shortcomings. A large number of users have used it, and maybe half of the users are satisfied and half of the users are not satisfied.

For users who are dissatisfied with Dyson, if we can solve their pain points, this is our opportunity. Therefore, competition is long-term and should not be based on a moment. Just like the beginning of the Anti-Japanese War, if we directly compare it, we can't defeat it. But Chairman Mao said that the enemy only gains momentum and then continues to decline. Although we have relatively little power now, we are constantly growing and developing, and our power is completely different.

Dyson has reached a high point since its entry into China. After years of development, we have also accumulated experience in brand communication and have begun to enter the channel of rapid growth. Now is the time to address the cognitive issues in the consumer mind. In the past, people did not compare. They believed in Dyson but not us. After trying to use it, I found that it is not that amazing, so I may think that we are not bad. In the past, smartphones were dominated by Apple, but now Apple's market share is only 25%. The prices and market share of domestic brands Huawei, VIVO, and OPPO (especially Huawei) have increased.

1. Danny You: So our Kingclean positioning is actually a bit similar to Huawei?

Mr. Ni: If we compare Huawei, the price is similar or even more expensive. If we exclude brands and only compare user experience, we have an advantage. In terms of technical parameters alone, the performance and experience of our vertical model should be better. What we lack is brand recognition. One reason is that the Kingclean brand is relatively young. In the past 10 years since we started from scratch, the value and influence of the brand have become greater and greater, and user awareness will also become higher and higher. Dyson has a lot of successful experience in global brand communication. At the same time, it has invested huge publicity expenses in the Chinese market to strengthen consumer awareness. We are weak in brand promotion, and the next key thing to do is brand recognition.

1. Danny You: Kingclean’s products are positioned as upright vacuum cleaners. This is somewhat different from mainstream domestic or Dyson-style vacuum cleaners. What is our purpose?

Mr. Ni: Positioning is to create a differentiated brand. I have always told the internal team that we should learn from the four German cars, Mercedes-Benz, BMW, Audi, and Porsche. Everyone is positioned at the high end. If the features are the same, only one will stand out, and the others will die. They represent different categories: Mercedes-Benz is positioned as a car for the boss to sit in, and it has a driver. BMW came out in the last 30 years and emphasized the driving pleasure of young people, so it was designed around handling. Porsche is for young people, emphasizing speed and passion. When I went to Germany to see it, no office workers drove Porsches. Audi is relatively modest and low-key. It is actually a car for managers and civil servants. When I went to Germany, most companies drove Audis, followed by BMWs. There were very few Mercedes-Benzes and no Porsches. So this positioning meets the needs of different people. For example, the rich second generation may drive a Porsche, and the boss may drive a Mercedes-Benz. A young civil servant, or a low-key professional manager may drive an Audi. This is brand positioning and characteristics. Therefore, Kingclean also needs to differentiate itself from other brands, such as Dyson, Philips and Kingclean. I can't be like Xiaomi, nor can I be like Dyson, Midea or Panasonic. I want to establish my own brand characteristics. This is our concept of designing vertical products.

1. Danny You: What are the brand characteristics of our Kingclean?

Mr. Ni: Kingclean is a high-end brand that advocates using technological innovation to lead quality life. There are two main points: one is that we need to satisfy users’ high-quality life through technological innovation. What is quality life? Demand from people with middle-income and above. The second Kingclean brand represents the vertical type, which represents portability. The core attribute of our products is lightness. Two Cokes are different, two Western-style fast food are different, and two cars are also different. But the principle of brand positioning is the same. If the Kingclean brand is applied to products, it will be zero if there is no personality. The final foothold of the brand is the differentiated characteristics of the product.

1. Danny You: Next, what kind of publicity method will be used to promote the Ke brand or the current new vertical products?

Mr. Ni: Our communication in the past was not focused enough, so in the future, whether it is mass media, high-speed rail, TV advertising, Internet content marketing, or Internet sales, they will all focus on the concept of lightness. Like the Boss high-suction range hood and the Haier anti-electric wall water heater, they all have a point that users should remember. Some people like foreign brands, but some people pay more attention to their own experience. I hope customers who are more focused on making home cleaning easier will think of Kingclean. Kingclean represents a better user experience and makes housework easier.

1. Danny You: What goals or expectations do you have for the Kingclean vacuum cleaner category?

Mr. Ni: We definitely want to become the representative of the category.

I think in terms of the overall market for vacuum cleaners, handheld is one category, upright is another category, and there is robot vacuum. I think these three are representative. In the future, the market category should be divided into three categories. Now we are the only one making verticals, and many people are making handhelds. But I think handhelds will be concentrated in the future and there will be no room for so many brands. It is not mature now, and small brands will become increasingly marginalized in the future. Every category has actually experienced this kind of fierce competition, and you will survive only if you represent the category. So our future goal at Kingclean is to represent the entire vertical.

Generally speaking, the popularity of vacuum cleaners in China is not very high now, and the market prospects are relatively promising. If your home has cement or tile floors, a mop is enough. But if you have a lot of soft furnishings, you must use a vacuum cleaner. For craft sofas, carpets, and floors, and then carpets, a vacuum cleaner is indispensable. With the improvement of living standards, vacuum cleaners must be used, and rechargeable vacuum cleaners will speed up product upgrading. Product changes also give us more opportunities for this new category. Now is a good time for Kingclean to strengthen the dissemination and development of category characteristics.

1. Danny You: Regarding the development of the entire vacuum cleaner, it has actually changed a lot in recent years. It used to be a horizontal type, but now it is a vertical type. What do you think the future development of vacuum cleaners and their ultimate form will look like?

Mr. Ni: Vacuum cleaners are different from others. The microwave oven works the same way. Vacuum cleaners can be designed to do many things. The vacuum cleaners I just talked about include hand-held vacuum cleaners, upright vacuum cleaners, and floor-cleaning vacuum cleaners, as well as various products for different niche applications. I think vacuum cleaners are a multi-category product and the concentration will decrease in the future, but there won’t be many brands. If there is free competition in vacuum cleaners, the future will be similar to that of air cleaners, with only three major brands remaining.

1. Danny You: In terms of product form, do you think it will still be the current handheld or vertical model within three years?

Mr. Ni: These three basic patterns have been established, but there will also be floor washers, carpet washers, and various lightweight ones. Subdivided categories will emerge.

1. Danny You: We at Kingclean also plan to do small categories?

Mr. Ni: We can do all of them, including handheld ones, but I can do it, but it’s different from Dyson. Mainly solves the problem of hand-held lifting. Because the arms hang down and are lifted easily, the muscles are not stressed, but when the arms are bent and raised, the design of the side handles puts stress on the muscles, so we tried to solve this problem. Jimmy's words also promote that the upper handlebar design is better and lighter than the side handlebar.

1. Danny You: What do you think of the current live broadcasts of Internet celebrities? Kingclean seems to have cooperated with Wei Ya to participate in the live broadcasts.

Mr. Ni: Online live broadcast is actually traffic marketing, not value marketing. When Chinese people buy things, one of them is to buy things at a low price, and the other is to follow the trend and join in the fun. If others buy something, I will buy it too. As a current marketing phenomenon, I think it will help some companies bring traffic to a certain stage. It turns out that the traffic of Tmall and Taobao is actually declining. It costs 100,000 yuan to buy resource traffic, but in the end, your sales are also 100,000 yuan. The cost is too high. Nowadays, Internet celebrities can bring a lot of traffic, but the actual cost is also high, and the brand cannot actually make money. The sales volume brought by Internet celebrities is very large, which can quickly improve the online sales ranking and bring about subsequent sales. However, the validity period of the ranking is very short, and the data is canceled after one month, making it difficult to develop sustainably.

For example, the lowest price on the Internet can only be made once or twice. It is difficult to make it continuously. Once the product is made, it will be dead. It used to be that Li Jiaqiweiya was doing it, but now celebrities are doing it more, and the traffic will gradually disperse. After a long time, you will find that it is just a low price, and consumers will gradually get tired. This is not value marketing and is not sustainable in the long term. Of course, when the economy is not good, everyone is doing it, and we are doing it, but basically each product can only be done two or three times before it declines. Moreover, this is impulse consumption, so the unit price is too high. Nowadays, large quantities are basically less than 500 yuan. Brand marketing is fundamentally about value marketing, spreading the core values ​​and the real benefits it brings to users. If this is not spread, it is not a long-term solution. We do not exclude Internet celebrities from bringing goods, we will do it, but we do not rely on it.

1. Danny You: Now that we have entered the era of brushless vacuum cleaners, the motor is the core. Kingclean is the leader in motor technology in the entire industry. But in the future development, how can Kingclean ensure that it is still the leader in the entire industry in terms of motors?

Mr. Ni: This must be continuous innovation and continuous pursuit of performance, better performance and lighter weight. But at a certain point, the significance of further breakthroughs will diminish.

I remember that 20 years ago, air conditioners were all competing for energy efficiency. Today, no one is competing. Why? When it reaches a certain limit, technology cannot break through, and theoretical calculations are limited to this limit. If it cannot go higher, everyone is almost there. In the future, it will definitely not be about who has better performance, because the difference is very small. What users can perceive will not be perceived in the future. At present, I think that after reaching this level, there will be no obvious breakthrough in the future. For example, if I have 550 watts now, is it necessary for you to go to 650 watts or 750 watts? The suction power is sufficient, and the battery would be heavier if it were larger.

For example, a motor originally weighed one kilogram, but reducing it to 300 grams is a huge difference. From 300 grams to 200 grams, it is reduced to more than 100 grams, and then it is reduced by 10 grams. There is no difference in the user experience. So I think technological progress is only a possibility in the future, but at a certain point, technological innovation will have its limits. The second difference is not obvious to users. Just like the high resolution pixel definition of current TVs, users cannot see it with the naked eye.

1. Danny You: Many friends have been communicating with me recently, asking when Dyson will be replaced by other brands, for example? I personally think that because Dyson had a relatively large lead in motors in the early days, if its lead in motors was not that big, its market share would be eroded by other brands.

Mr. Ni: Not only the motor technology, but also his products will have shortcomings, and customers will naturally be diverted away. . For example, Apple used to be very good, but now users find that this is the case and other brands are equally easy to use, so many people will leave.

1. Danny You: You tell us as a motor expert. For example, the current Dyson motor can reach 125,000 rpm. What will be the limit in the future?

Mr. Ni: The future development of motors does not depend on the speed, because if the speed goes up, there will be problems with the bearings.

Why do ordinary motors cost from 40,000 to 100,000? It’s for the sake of small size and light weight. Originally, the difference in weight was one kilogram to two kilograms. The difference is very big, but now it’s 100g lighter. Is it interesting? 100 grams only weighs two ounces, which is not noticeable to customers. At present, the motor industry is basically like this. Any further progress is only small progress. The progress at this time is not perceptible to users. So when we talk about creating value, we mean creating value that users can perceive.

1. Danny You: There are some current directions, that is, some manufacturers have begun to use soft-pack lithium batteries. Do you think there is any progress in this area?

Mr. Ni: There is no obvious difference between the soft-pack lithium battery and the original 18750 and 21700. The volume-to-energy ratio is like this. Currently, the core technology is in battery factories, such as Sony and Samsung. For example, the high-power current we make is close to 20 amps, but domestic products are still not enough. Now we have chosen the best Sony and Samsung.

1. Danny You: There was a period of trade war last year, which caused many companies to go to Southeast Asia. Do you think the future pattern, for example, the OEM of the vacuum cleaner industry, will it move to Southeast Asia?

Mr. Ni: The trade war will be fought and settled for a while. Because of the trade war, we have deployed in Thailand and Vietnam. After opening the factory, we bought land in Thailand but did not build the factory yet because the tariffs were now waived. Vietnam has started production, but the volume is not large. The main reason is that there are not really many taxes added yet, and the cost is still cheaper compared to China. There will be a trade war in the future. If the increase is really raised to 25%, then we may leave. Now we are prepared with both hands. If tariffs are added, I will go to Vietnam to do more. If tariffs are not added, I will go to China to do more.

1. Danny You: Do you think trade wars will become the norm in the future? Many people are more concerned about the transfer of industries caused by trade wars. Do you think it will lead to the transfer of industries?

Mr. Ni: The United States wants to contain China’s development. Regardless of whether it is beneficial to him or not, he will do it to you. There is a high probability that we will still be able to win in the future, so we will build overseas production bases in the future. The U.S. business accounts for more than 100 million US dollars and 30% of our exports. The impact is quite large.

1. Danny You: Last question, could you sum up Kingclean’s past and look forward to Kingclean’s future in one sentence?

Mr. Ni: In the past, we talked about innovation-driven development, creating customer value through technological innovation, and driving enterprise development through creating customer value. Innovation drives development, which has been the core strategy of Kingclean's development in the past.

In the future, we will mainly rely on brand development, use technology to create quality life, and build Kingclean's everlasting business with brand.