AI in China is no longer an alien concept, with the advent of smart switches, robot vacuums, smart refrigerators and smart washing machines. The smart speaker of today plays a central role in all this by acting as the control hub.

ASKCI research data indicates that a total of 15.6 million smart speakers were sold in the first half 2019, a 233% growth over the previous year. Sales figures came in at CNY 3.01 billion (USD 430 million), a 149% growth over the previous year. While the Chinese smart speaker market was intially marked by confusion with multiple brands and companies fighting for dominance in the market, Xiaomi, Baidu and Alibaba (T-Mall) have come to take possession of a large majority of market shares.

Explosive sales growth

Smart speakers add a layer of smart functionality to the traditional speaker by the connection of wifi and voice interaction. Smart speakers can play music, play the news, provide search capabilities, order takeaways and act as a central control hub for smart appliances through voice control.

The Chinese smart speaker market represented 10% of the global smart speaker market in 2018, and has effectively become the world's second largest smart speaker market. 2018 Q4 sales alone were at 8.6 million units, a figure that represented 40% of all sales in 2018. Continued growth in smart speaker sales will eventually boost the Chinese smart speaker market size to surpass the 700 million CNY watermark in 2019.

Market concentration
       The Chinese smart speaker market was initially in a state of free competition before settling upon Alibaba (T-Mall), Baidu and Xiaomi as the market leaders by the end of 2018. These three brands roughly represented 93.3% of the Chinese smart speaker market in the first half of 2019.

Price trends
       Prices are expected to become more affordable for consumers as the technology behind smart speakers continue to become cheaper over time. The big three are expected to rely on effective marketing on the power of their brands to promote their products while other brands are expected to become embroiled in price wars.

Market size expected to grow larger in the future
       Despite recent high sales, smart speaker penetration rates in China remain quite low. This provides ample room for growth in the smart speaker market. Fierce competition in the smart speaker market between smaller brands and the struggle for dominance between the Big 3 is expected to fuel market growth even more in the future.