Lixil to focus on China for its innovation drive

Lixil Group, a Japanese building materials and housing products provider, is ready to make China the center of all its innovative initiatives on expectations that the nation will remain one of its top three markets in the coming decade, a senior executive said.

"China is our third-largest market globally right now. I expect … China will remain a top three market in the next 10 years as well … but most importantly it will be our innovation driver. That is really the main focus and that's what excites me about China," said Bijoy Mohan, executive officer of Lixil International.

"Now … the quality of growth will be much better than anywhere else … so China becomes our pioneer for innovation," Mohan said.

Mohan, who is also executive vice-president of Lixil Group, said Chinese consumers' great interest in trying out new ideas, as well as the country's digitization trend are unique globally, which has propelled the company to choose China as an innovation center.

The scale of China's digital economy expanded from 22.6 trillion yuan ($3.11 trillion) in 2016 to 50.2 trillion yuan in 2022, and the proportion of the digital economy in the country's GDP surged from 30.3 percent to 41.5 percent during the same period, according to a report by Beijing Youth Daily.

Compared to developed countries whose digital economy accounts for more than 65 percent of their GDP, China's digital economy has great potential and large innovative space, the report added.

"Along with the thriving development of scientific and technological revolution and industrial revolution, a series of disruptive technological innovations are creating new products, new formats and new models. Different from previous industrial transformation, China is already in a leading position worldwide this time," Hong Yongmiao, dean of the School of Economics and Management at the University of Chinese Academy of Sciences, said during a forum on new quality productive forces and digital economy last month.

Lixil is tapping into future opportunities, inspired by the benefits it has received from China's national and industrial strategies in the past.

"One of the big areas that we benefited from in the past has been China's focus on driving the real estate market and investing in the real estate industry and urban development. This created a scale that allowed us and many of the companies in the building materials industry to establish manufacturing, large distribution structures, and new technologies, because the Chinese industrial policy created the scale very quickly," Mohan said.

This was a major benefit that not only helped its business in China, but also globally.

"Because the scale that China creates allowed us to invest in really good new technologies for manufacturing in China … But then eventually those became systems that we took to the rest of the world as well," he said.

Looking forward, Mohan said there is no doubt about the size of the China market.

"It will continue to remain our top two or three market. No question about the opportunity for all of our brands because all of our brands are present here; it gives us many more different areas to work on. And increasing sophistication and demands of the consumer make it something that keeps us on our toes," he said.

The unique thing about China is that the country has all of its active brands, including Grohe, American Standard, Inax and Lixil Kitchen. In addition to its main headquarters for China businesses in Shanghai, the group also has its Asia R&D center and a Lixil experience center in the city.

Operating five factories across China, the group produces some 8.5 million pieces of products every year in the country, Mohan said.