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With an increasingly global perspective and adjusted processes, Hager Group reaches out to customers in new markets and market segments. Shark Project, a complete full range of Wiring Accessories (WA) made in China for China, which will hit the market in a few months, is a striking example of this new approach. For Hager Group, WA in China is no longer about buying from traditional retail or DIY stores; it is a bold step into the booming world of the e-commerce market.
Bringing the best of both worlds together
How do you construct a product, which brings together local expectations and experience from different parts of the world? The simple yet clever answer is: by bringing the best of both worlds together - Hager Group Shark Project is a great example of this. The Shark Project, kicked-off in January 2016 and completed by the end of this year, is the launch a range of wiring accessories for the Chinese middle segment market. It is also a great example of our Change Lever Global Perspective.
“Shark Project acts as a role model for the group as it combines Chinese culture with European expertise,” comments Pierre Jeunesse from Offer Management. “The objective is to produce a Chinese product, which will act as a door opener for other projects in the country.” The project’s name, which was developed by the project team in a brainstorming session, symbolises the aggressive offer Hager Group is about to launch onto the Chinese market. “We like animals’ names and have a complete zoo of project development names - Monkey, Panda, Grizzly”, jokes Jeunesse. “And as the shark is an intelligent predator, we thought it would be perfect for our project.”
After 18 months of hard work, the project is currently entering into its final stage. By combining French product design, Chinese product development and German engineering support, Shark integrates expertise from almost all parts of our Hager world. Chinese colleagues were responsible for project management and researching customer and market expectations. Production will be in China in partnership with a strong local player based in Changsha, in the Hunan Province.
Gordon Wang, Marketing Manager Hager China comments that, “…Wiring Accessories are the critical part of Hager Smart Building Solutions in China.” There were opportunities in the high end market with design switches made by Berker, however, until now there was an extremely limited offer for China’s growing middle & residential building segments. This was particularly detrimental for contracts with 4 to 5 star-hotels, as in China contracts usually cover all elements of electrical installations.
Pascal Dubreucq, Hager Groups Senior Vice President Asia Pacific insists that “…to be successful, solutions have to meet local expectations, design preferences, cost points and standards as well.” While premium WA’s by Berker have a rough price of 100 RMB (which is far beyond the average consumers’ price range in China), new switches and sockets will cost only one tenth of this and will therefore open a new target segment for Hager. The price point was reached by using a global modular platform and a local production partner, who will manufacture the product following Hager quality standards, but at a much lower price.
There will be three product ranges and several hundred varieties, the official name yet has to be defined. For developers and commercial partners, Shark WA’s will be offered via the B2B platform Alibaba 1688, Chinas most important with a market share of 60 % in LV electric products. It will also be sold to end-consumers through Alibaba Tmall & JD.
These two e-commerce platforms cover roughly 95 % of China’s market share in LV electric products and are therefore a must for any company wanting to reach Chinese customers and become a strong WA player in China.
This e-commerce will also open doors to the renovation business and secure delivery within 48 hours anywhere in China. As Hager does not have a retail channel business model in China, e-commerce platforms are key for project sales.
Chinese B2C model
Gordon Wang points out that the B2C model in China is different to that in most European countries. Many consumers choose their own WA’s when renovating or decorating of their homes. By providing an offer in some of the most popular e-commerce-platforms, Hager’s WA’s are well within their reach.
On route to becoming number 2
With this unprecedented road to market coupled with a new product range, Shark Project is a double premiere. The project will enhance awareness of Hager brand in China which up to now mainly is known to only developers and industry insiders. “By being present on popular e-commerce platforms, we are targeting being at the same level as Siemens, they are our benchmark” explains Beverley Wang, Strategic Marketing Manager Hager Group China. In 2016 alone, Siemens sold online Wiring Accessories with an average value of 415M RMB -50% of total sales in the market. Competitor brands like ABB, Schneider and Legrand make 15 to 45% of their WA business via online channels. The market for electrical installations is expected to explode with an annual growth rate of 40% between 2016 and 2020. “In light of this, it’s high time we caught up. Shark Project offers perfect solutions to conquer this market and become the number 2 German player after Siemens,” says Beverley Wang.
After the 2018 Chinese New Year, this new product range will be offered in project sales (the commercial sales route to market for Hager China) and launched on e-commerce. While it’s impossible to estimate how successful it will be, it will no doubt contribute to Hager Group’s ambitious goals in the Rapidly Developing Economies (RDE’s). Hager Group’s ambition is to grow its business in China from 255 million Euros to 350 million by 2020; we still have to bite a big chunk out of the competitors prey, but after all, that’s what sharks are notorious for.