BEIJING, Aug. 18, 2023 /PRNewswire/ -- In June of this year, Fortune China released "The 2023 Representative Chinese Companies in Overseas Market" list. The list highlights Chinese companies and their growing influence as they explore new frontiers across seven sectors. Among these, the Enterprise Service sector stands out for popularity. Tuya Smart (NYSE: TUYA, HKEX:2391), a key player in the sector, holds the title of being the No. 1 Internet of Things (IoT) PaaS provider in the world in terms of shipment volume. Operating under a "B2B2C" business model, Tuya serves as an IoT developer platform, engaging a massive community of over 700,000 platform developers. The company has successfully gone public in New York and Hong Kong, becoming the first listed global IoT cloud platform.
As a global company, Tuya's model of providing one-stop services to overseas businesses has been successful, especially compared to the traditional model of direct product distribution in global markets. This success is not only due to its innovation in the IoT field, but also due to its long-term cooperation with Amazon Web Services (AWS). Partnering with AWS, Tuya currently provides IoT services to 220 countries and regions globally, covering nearly every corner of the world.
Moreover, facing challenges of global warming and the competitive IoT market, Tuya has made early arrangements in frontier areas such as Home Energy Management System (HEMS) to truly achieve sustainable development, and seize the business opportunities in this emerging market.
Over the nine years since its founding, what successful experiences and insights has Tuya gained in the overseas market? How has Tuya's cooperation with AWS enhanced its industrial value chain? What shortcomings still need to be overcome in the current overseas situation? What opportunities does the emerging HEMS market mean for Chinese companies? With these questions, Fortune China recently had an exclusive interview with Ms. Jingdan Na, Vice President of Marketing and Strategy and Chief Marketing Officer (CMO) at Tuya.
Na believes the synergy of technology, platform, and reputation drives the collaboration of numerous large enterprises and developers with Tuya in building the IoT ecosystem. Meanwhile, the emerging HEMS market has promising prospects. It is not only the entry point for the integration of IoT and new energy, but also consistent with the trend of achieving carbon peaking and carbon neutrality goals. In the future market, HEMS can be in high demand. It is believed that this technology will gain success first in European and American markets.
In the Face of Global Warming, HEMS Aligns with the Goal of Fighting Climate Change
This summer has been extraordinarily hot! July 3 broke the global hottest day record, according to data from U.S. National Oceanic and Atmospheric Administration (NOAA), with the global average temperature exceeding 17 degrees Celsius for the first time. Just a day later, the record for "the hottest day on Earth" was broken again, and it can be predicted that this record will be broken repeatedly in the future.
In response, the World Meteorological Organization (WMO) is urging countries to prepare for the impact on human health, ecosystems, and the economy. The most direct impact is that the demand for high-energy-consuming appliances such as air conditioners have surged among consumers. Therefore, the concept of HEMS has once again been raised in public.
Na pointed out that HEMS is the future of smart homes. "According to global electricity data, residential electricity consumption accounts for 36.6% of total societal electricity consumption, and electricity usage is very inefficient, resulting in serious energy waste. In many places in Europe and America, electricity control is still manual."
In Na's view, with the popularity of IoT products, "there should be new technologies to drive the full digitalization of home energy management, which is a great opportunity I saw last year and will also be the next turning point for smart homes."
The concept and products of HEMS were first proposed in Europe and America as early as in the 1970s, but for various reasons, market penetration has been extremely low and there are obvious technical defects. "Home electricity system are still limited by wired protocols in many ways, so the number of devices connected is low. Many have not yet been integrated with power companies, so each part of the system is disjointed."
Even such an elementary system "can help some regular households in the United States and Europe save 30% of their energy usage each year, saving over $400 in electricity bills per year." At present, based on the IoT platform, HEMS have a clearer path to the market. Considering the recent surge in energy prices in Europe and America, the market starts to be profitable.
From the perspective of product commercialization, smart devices with power-saving functions, such as smart plugs and smart thermostats, have emerged and gradually gained popularity in overseas markets. These emerging products are parts of smart home. Tuya's product concept is even more aggressive, aiming not only to build an interconnected system of smart devices, but also to achieve precise electricity consumption data analysis. Ultimately, it seeks to truly achieve energy conservation and emission reduction in the smart home fields through home electricity strategy management.
Na summarized the logic behind this product as observation, execution, optimization, and prediction. More specifically, it can be explained as the intelligence of electricity meters, the application of energy-saving devices, the optimization of electricity use models, and the precise prediction and execution of electrical devices. This allows both passive monitoring and active and intelligent management of household energy, bringing convenience to users and saving money while being energy-efficient and environmentally friendly.
"Assuming that the electricity system adjusts in real-time and the lowest electricity cost occurs at 4 o'clock in the morning, with HEMS's intelligent prediction and execution, washing machines can automatically turn on when electricity cost is lowest, achieving a win-win situation for consumers and electric power companies," Na said.
Once HEMS is widely popularized, the electricity bills received by consumers will be totally different. Future electricity bills can be similar to current mobile phone bills, with breakdowns of electricity usage and time for large and small appliances, lamps, and other products listed separately. For example, bills can show how much electricity the refrigerator and air conditioner used this month, or whether the appliance was more energy-efficient compared to the last month. This allows consumers to understand more directly the details of appliance power consumption and energy-saving algorithms of appliances operation, thereby optimizing electricity consumption.
Currently, the Best Market for HEMS is Europe and America
Transitioning from empowering smart homes to providing home new energy management solutions is a huge blue ocean market, and the venture is in the line with Tuya's core competencies.
"Tuya serves as a platform, so it can have diverse observations and identify blind spots for other enterprises more easily," Na explained. In recent years, energy prices in Europe and America have skyrocketed. "People used to not care about electricity bills, but now an increasing number of consumers and companies are starting to explore ways to save electricity."
From a global perspective, energy prices are rising, while the target date for implementing the Paris Agreement, which aims to address climate change, is approaching, and the concepts of zero carbon and peak carbon have taken hold. Regarding this, Na believes that currently the best market is Europe and America, especially Europe, according to market research.
"I think the European market is the most receptive and demanding of innovation. The cost of electricity in Europe is too high, so it is feasible to impress consumers with value-added services that can save electricity, " Na said.
Ten years ago, smart home products seemed unaffordable, but now they have become common for households. Since the number of globally connected smart home products has exceeded tens of billions, the commercialization of HEMS products will also be attainable in the future. Especially if the global heatwaves continue in the summer, the pace from vision to reality may significantly accelerate.
Looking into the development of the smart home industry, solutions for audio-visual entertainment, home & living, and home security systems have been greatly enriched, and the market competition is extremely intense. However, the smart energy management field that has been neglected for a long time is still in its early stages of development, which means it has huge potential and is truly a blue ocean market.
Considering business development, Tuya seized the opportunity from the explosive growth trend of smart homes nine years ago, and firmly established the path of platform-based development with a focus on 'connectivity + ecosystem'. Cooperating with AWS, Tuya has a significant chance to place itself at the forefront of HEMS deployment when the next decade's opportunity arrives.
Collaboration with AWS to Drive Innovation in the IoT Market
One important reason behind Na's optimistic outlook for the development of HEMS is the unprecedented prosperity of the IoT market over the past decade. This has given her great confidence. Tuya has distinguished itself in the trend of IoT innovation, accurately establishing its market positioning. The company does not manufacture hardware products but provides customers with one-stop IoT solutions. Its main customers are enterprises that tend to go global, and cooperation with AWS has played an indispensable role in this process.
When reviewing the cooperation with AWS, Na said: "Tuya positioned itself as an international company at the early stages of establishment. If we didn't choose AWS at the start, our path to globalization might not have been so smooth, so we are deeply grateful."
There is a core technological pain point for the IoT industry in the highly fragmented scenarios and demands of downstream application. This leads to diverse network communication methods and platforms, posing significant challenges to achieving device interconnectivity. Additionally, it also requires deployment of global cloud networks. Public data shows that as of the end of March this year, Tuya IoT Development Platform has covered over 200 countries and regions, with over 782,000 registered developers worldwide. It has formed a huge advantage in developer ecosystem. Meanwhile, AWS global infrastructure and localized service deployment capabilities have also promoted Tuya's global expansion.
As a global IoT platform, Tuya has extremely high requirements for cloud services in terms of reliability, stability, and scalability. For example, it requires service response time controlled within 100ms. Using cloud computing, storage, database, data transmission and other services on AWS, the availability of Tuya's cloud service platform has reached 99.99%, and its stability has been greatly guaranteed.
"Choosing a reliable technological service provider like AWS can help us solve the real pain points of going global," Na emphasized.
In China, the going global story such as Tuya's that involves collaboration with AWS is not unique. AWS ranks top worldwide and in Asia Pacific "IDC MarketScape IaaS Provider" and over 80% of Chinese enterprises going global have chosen to work with AWS. By industry-leading security and compliance, global infrastructure, over 200 types of cloud services, global partner network, mature and rich customer experiences, and powerfully global business ecosystem, AWS has been providing sustained and reliable support for Chinese enterprises' overseas expansion for the past decade.
On the cooperation with AWS, Ms. Na shared that "both companies have flat organizational structures, so we can work together to serve local customer, and respond to customers' need in a timely manner. " This also reveals the secret of Tuya's success as a "B2B2C" company, standing on the shoulders of giants.
