As Europe trades down, can Chinese smart hardware win over consumers?

After conducting on-the-ground research across several European countries, including Germany and Italy, Junhao Liao, an investor at Zhixing No.1 Fund, noticed a surprising trend. Even in regions known for their pursuit of aesthetic perfection and craftsmanship, a wave of consumption downgrading is sweeping through.

E-commerce platform Temu, known for selling goods at rock-bottom prices, has surged to the top in multiple European countries. Meanwhile, a budget version of Zara—with products so poor in quality they barely last a season—has found favor among German consumers.

According to European Central Bank forecasts, nominal household income is expected to grow over the next 12 months. However, inflation will outpace that increase, fueling consumer pessimism and reducing spending power.

Yet, against this backdrop of thrift, Chinese smart hardware is bucking the trend. Sales and revenue for products like robotic vacuum cleaners and lawnmowers continue to climb. Other hardware categories are also gaining traction. Asmoke, for instance, raised more than USD 1 million through crowdfunding for its smart electric grill. Meanwhile, RingConn generated an eight-figure RMB sum in revenue through its standalone D2C website in 2023 and recently surpassed USD 5 million in crowdfunding.

Data from Eurostat shows that in 2023, China exported EUR 155 billion (USD 160.8 billion) worth of high-tech products to the European Union, accounting for 32% of the EU’s total imports. Electronics and telecommunications equipment made up the largest share at about 39%. By 2027, Europe’s smart home industry is projected to reach USD 56.18 billion, growing at a compound annual growth rate of 12.15%.

As more companies look to expand globally, Europe stands out as a core market—a fertile ground for brand-building and long-term growth.

For years, China’s hardware exports have been synonymous with high cost-performance. Chinese startups generally excel at innovation, balancing sleek design with practical functionality. Coupled with the cost advantages of domestic supply chains, these products align well with the needs of Europe’s middle-class consumers, who are now navigating an era of downgraded consumption.

But Europe is also where many startups meet their demise.

Chinese consumers often joke that their shopping habits have evolved from yesterday’s JD.com and Tmall to today’s Pinduoduo, signaling a willingness to trade down in quality and design. European middle-class shoppers, however, are more discerning. While more than half actively seek discounts and coupons, they still hold high expectations for brand reputation, design, and service.

Europe presents immense market potential, but for Chinese hardware entrepreneurs, success requires more than just an aggressive growth mindset. It demands a deep understanding of this vast and fragmented continent.

Crossing the billion-dollar threshold

The hard truth is that while Chinese hardware companies often pride themselves on product strength, that alone is usually only enough to support small-scale businesses in unfamiliar European markets.

“If you don’t have a brand presence overseas, a strong product will still sell—it might generate tens of millions of RMB in annual revenue. But to scale from tens of millions to hundreds of millions or even billions, brand influence is indispensable. The product is the foundation, but branding is what amplifies a company’s reach,” said Hao Wu, co-founder and CEO of RingConn.

Yet, there’s an unavoidable reality: building a brand in Europe requires significant investment with no immediate return.

Europe is a complex market, composed of multiple countries with distinct languages, cultures, and economic structures—all of which shape unique consumer habits. A brand that thrives in Germany, for example, is not guaranteed the same success in English-speaking markets.

This fragmentation means marketing strategies and influencer partnerships cannot be easily replicated across borders. “Given the same level of investment, I’d rather choose a single, unified market like the U.S., where language, culture, regulations, and policies are largely consistent across states, and the population is big enough to maximize return on investment (ROI),” Liao told 36Kr.

Because of this market dispersion, the few events that successfully attract pan-European audiences are often dominated by major Chinese corporations with deep pockets. During the UEFA European Championship, for instance, companies like Hisense spent heavily to secure advertising slots.

For resource-constrained startups, choosing the right country or region before entering Europe is critical to maximizing early-stage ROI.

Asmoke, a smart electric grill brand, offers a case in point. The maturity of the local market, consumer education levels, and business adoption speed all directly impact market penetration.

Take Germany. With high income levels, an educated population, and a strong engineering culture, many consumers naturally gravitate toward smart hardware. That’s why Germany is often the first choice for companies establishing European headquarters.

Insights from Kickstarter’s crowdfunding platform further illustrate this trend. Since launching its smart outdoor grills, Asmoke has seen its highest sales in Germany, the Netherlands, the UK, and Northern Europe—helping the company pinpoint the most promising regions for expansion.

Asmoke founder Wenqi Wu’s on-the-ground research also confirmed that distribution channels in Germany and the Netherlands prioritize the grill category, making them ideal launch markets.

Yet, even a successful crowdfunding campaign is only the start of a much longer journey.

Typically, a company’s growth accelerates only after surpassing USD 1 billion in revenue. To reach that milestone, businesses entering Europe must build local teams capable of navigating its fragmented retail landscape.

But here lies the contradiction: most companies lack the financial resources and talent density to establish localized teams before reaching that level of revenue.

“At the very least, you need a CMO or regional head—ideally the founder—who can fully immerse in the local market. This kind of talent is hard to find, especially since effective brand communication requires a deep understanding of the country’s culture and lifestyle,” Liao said.

Put simply, only companies willing to burn cash in the early stages can survive in Europe.

From a market prioritization standpoint, for hardware startups still in the zero-to-one phase, Europe ranks only fourth or fifth in global expansion priorities—trailing behind markets with higher ROI and fewer barriers to entry.

Marketing before market entry

How long does it take for a frequently traveling European white-collar worker to decide on a lightweight hair dryer?

The typical customer journey starts with a quick search on Amazon, where Sylph’s high-speed hair dryer might appear as an option. Later, influencer reviews on YouTube or TikTok may help shape their impression. Meanwhile, scrolling through Facebook, X, or TikTok, they might encounter brand ads.

By the time the customer visits a physical store to test the product before making a purchase, anywhere from one to three months may have passed.

This lengthy decision-making process follows what’s commonly known as the marketing funnel—a gradual filtering process where a broad pool of potential customers narrows down, with only a small fraction ultimately making a purchase.

In Europe, this funnel is even more complex. Differences in app usage habits, consumer preferences, and purchasing behaviors across countries create additional layers of fragmentation. Furthermore, with e-commerce penetration lower than in other regions and in-store purchases still dominant, the overall buying cycle tends to be longer. The European consumer funnel is not only more selective but also narrower at the bottom.

To break into this challenging market, launching a flagship product is often the most effective strategy. According to Yuan Lin, founder of Sylph, there are two primary approaches: crowdfunding and e-commerce platforms.

The crowdfunding route works best for products that emphasize technological innovation—think 3D printers, robotic lawnmowers, and other high-tech gadgets. These products typically have an average selling price above USD 500 and appeal primarily to European male consumers. Beyond securing an initial customer base, crowdfunding also provides the capital needed for a company’s first production run.

Founders who take this approach tend to have strong backgrounds in internet marketing and social media strategy. Once their product gains traction, they quickly pursue venture capital investment to scale operations. This funding is then channeled into launching a dedicated website, running paid advertising campaigns, and ultimately building a D2C brand.

The e-commerce platform route, on the other hand, is preferred by companies with deep manufacturing expertise and proprietary technology or patents. These businesses often establish an early foothold on Amazon and other online marketplaces. Leveraging supply chain advantages, they continuously develop new products, building a diversified portfolio that increases the chances of creating multiple flagship products over time.

Regardless of the approach, a strong product strategy and sufficient capital reserves are crucial for generating a viral hit. Additionally, product preferences vary widely across European markets, requiring brands to tailor their selection and pricing strategies to local tastes. For instance:

• Nordic consumers may favor minimalist, nature-inspired designs.
• German shoppers tend to prioritize practicality and functionality.
• Dutch buyers often seek sophistication and variety.

To succeed, companies must align product development, marketing strategies, and regional pricing with these distinct consumer preferences.

While today’s product strategies are largely centered around online channels, brands aiming for long-term success in Europe must eventually expand into offline retail.

Europe’s fragmented landscape—shaped by diverse policies, economies, cultures, and logistical challenges—has made distributors the ultimate gatekeepers of the offline retail market.

“The short-term success of a product often comes down to smart product selection,” said Asmoke’s Wu. “Data analytics can help with quick inventory turnover, product iteration, and market adaptation, but it won’t necessarily get you into retail distribution channels.”

European retailers assess brands based on three key factors: brand recognition, product competitiveness, and operational infrastructure.

Distributors, in particular, tend to favor brands that already have consumer awareness. “Retailers are generally unlikely to consider products that lack brand recognition in the local market,” Liao said. “Without an established presence, even a well-designed product may struggle to gain traction.”

While innovative startups often introduce unique offerings, their competitive edge is rarely significant enough in the short term to convince distributors to take a chance on them. Retailers want assurance that a product will sell. Without strong differentiation or a proven track record, startups may find themselves at a disadvantage.

Beyond the product itself, a company’s operational infrastructure plays a crucial role in determining whether it can break into retail. Retail negotiations revolve around key business terms such as profit margins for distributors, payment cycles, and promotional budgets. Many startups lack the local customer service, logistics capabilities, and operational scale to meet these demands, making direct partnerships with major retail chains difficult.

As a result, most European retailers prefer working with trusted distributors rather than engaging directly with startups. These intermediaries bridge the gap between brands and retailers, ensuring smoother operations and reducing risk for both sides.

“Retailers worry that many startups lack the resources to build a local team that can effectively support sales and logistics,” Liao said. “If they work with a distributor, they have a safety net—any issues with the product can be handled by the distributor, reducing friction and communication costs.”

A case in point is Evowera, a supplier of advanced servo motors. Specializing in custom electric motors and controls, Evowera collaborates with salons across the UK, Italy, and other European markets through original equipment and design manufacturing (OEM and ODM) partnerships, providing core components and complete hair dryer solutions.

Because the number of salons each distributor serves remains relatively stable, Evowera prioritizes maintaining consistent support and service rather than continuously seeking new clients. Founder Rui Bai described the company’s streamlined B2B supply chain, which operates in three key stages:

1. Salons place orders with their distributors based on product needs.
2. Distributors consolidate these requests and relay them to Evowera.
3. Evowera designs and manufactures products according to these requirements before delivering them.

This B2B model minimizes risk while ensuring a strong product-market fit, allowing Evowera to maintain steady growth without the unpredictability of direct retail sales.

Currently, multiple industry insiders believe that Germany and the UK are the two most attractive entry points for Chinese hardware startups in Europe.

For companies that gain traction on Kickstarter, the UK and North America share similarities in language, influencer networks, and consumer behavior, providing a strong foundation for early growth.

Meanwhile, Germany is the largest and most affluent consumer market in Europe. Establishing a foothold there can open doors to broader European expansion.

“If you gain traction in Germany, even if consumers in other countries haven’t heard of your brand, distributors will take notice,” Liao said. “When they start approaching you, that’s when you know it’s time to expand into new markets. By working closely with distributors and aligning brand strategy, scaling across Europe becomes significantly smoother.”

China sees surge while Europe downgrades consumption

The trend of consumption downgrading among Europe’s middle class is reshaping global markets.

Beneath the surface of what appears to be a sluggish consumer environment, Chinese smart hardware companies are gaining momentum. By leveraging high cost-performance ratios, innovative design, and diverse product offerings, these companies are successfully penetrating the European market through a mix of crowdfunding, e-commerce platforms, and offline retail partnerships.

At the same time, Europe’s well-developed physical retail networks—spanning boutique high-end stores to large-scale chain supermarkets—offer a variety of sales channels tailored to different product tiers.

Yet, this vast and fragmented market presents significant challenges for Chinese hardware entrepreneurs. The mature distribution ecosystem in Europe remains one of the biggest barriers to entry. With distributors holding absolute control over offline retail, brands must demonstrate both product competitiveness and strong financial performance to secure a place on store shelves.

A common strategy among Chinese companies expanding into Europe is to launch a breakout product in a single country or region, using it as a springboard for broader expansion. After establishing a foothold, they can tap into local market knowledge and introduce products tailored to regional consumer preferences.

For many, success hinges on an evolving SKU strategy—continuously launching new products that align with regional tastes while maintaining cost advantages.

Over the past decade, companies like DJI, EcoFlow, and Bambu Lab have paved the way for Chinese hardware brands in Europe. Their sustained investments have not only fueled rapid business growth but have also nurtured a new generation of professionals with deep market insights and on-the-ground experience. These experts are now bridging the gap between Chinese innovation and European consumer preferences, expanding into new product categories and adjacent industries.

Ultimately, success in Europe demands more than just great products. Companies must develop precise branding and marketing strategies, forge strong distributor relationships, and build robust after-sales and logistics networks to ensure smooth market penetration.

As competition intensifies, only those willing to adapt and invest for the long haul will maintain their edge in the European market.

This article was written by Huang Nan for 36Kr.