This is the second time Xiaomi has made a foray into air conditioning, the first being marked by controversy. In 2015, Xiaomi teamed up with electrical appliance manufacturer Midea Group (美的) to create a smart AC unit. The cooperation came after Xiaomi bought shares worth RMB 1.26 billion in Midea, hoping to tap the smart appliances market. The move drew ire from Dong Mingzhu, president of Gree (格力), Midea’s main competitor, who berated the duo, saying that the “two swindlers working together make it into a fraud group.”
Xiaomi’s and Midea’s i-Youth Smart Air Conditioner met with a mediocre response from consumers despite the unit’s ability to interact with Xiaomi’s smart devices, including Xiaomi’s smartphones, fitness bracelets, and the Mi Home Smart Kit.
The announcement of the new air-conditioner has prompted Chinese media to ask whether history will repeat itself or will it end up even worse, like Gree’s smartphone which turned out to be “big thunder, small raindrops.”
Industry insiders believe that Xiaomi will have a hard time getting market share in the short term (in Chinese) because it does not have its own AC factory. However, the company’s entry into the market may drag down the overall market price and even set off a round of price wars. The Chinese air-conditioning market is currently mainly divided between two air conditioning giants Gree and Midea, followed by Haier (海尔). Xiaomi holds 7% of the market.