Chinese robot vacuum maker ECOVACS Robotics Co., Ltd., backed by IDG Capital, has filed with the country's securities regulator to list on the Shanghai Stock Exchange.
The story of ECOVACS is a perfect illustration of how Chinese companies are transitioning from low-end manufacturing factories to technology enterprises with in-house research and development capacity to obtain core technology competence.
Founded in 1998 by Chinese entrepreneur Qian Dongqi, Jiangsu province-based ECOVACS was initially an electronics manufacturer making vacuums for Philips, Panasonic and Electrolux as an original equipment manufacturer (OEM).
Founder Qian realized around 2000 that his company needed to move up the value chain with its own technology edge. At one time, ECOVACS tried to take apart a vacuum made by British company Dyson Ltd. and make one similar product based on self-developed patents.
Ironically, even as ECOVACS was able to defend itself for intellectual property infringement in the courts, its products were mass copied by other Chinese manufactures at a lower cost, leading the company to shut the product line, according to Chinese media reports.
Since then, ECOVACS has continued to invest in research and development, and began focusing on robot vacuums and robot home appliances in 2004 after Qi saw iRobot's popular robot cleaners. Today, the company sells its products in over 30 countries including robot floor cleaner, robot window cleaner, mobile air cleaner and humidifier, as well as home entertainment and security robots.
It claims to be China's number one robot home appliances maker with a 65% market share, and currently employs more than 5,000 people with corporate offices in Canton Ohio, Dusseldorf Germany, Tokyo Japan and Suzhou city in China.
In 2013, IDG Capital invested an undisclosed amount in ECOVACS in exchange of a 10% stake in the company. The venture firm's stake was reduced to 9.12% as the company conducted a shareholder restructuring after it decided to list domestically, instead of in the U.S. as initially planned.
Companies in China must wait in queue for multiple years after they file an IPO prospectus to complete an IPO, as there are currently over 800 companies in the pipeline waiting to be permitted to complete their listings.