A concept called “Hidden Champion” that went widespread worldwide was
proposed by the American management master Herman Simon in his book called
“Hidden Champion–Who is the World’s Best Company”.
The qualifications for “Hidden Champion” were mentioned in this book:
- With No.1 or No.2 market share in the global market, or No.1 in Europe, or at least leading the market
- With annual sales of less than $1 billion (except a few—4.4% of companies cited here have annual sales of more than $1 billion)
- Little known, low social visibility
The lessons of some Hidden Champions were summarized in this book:
- Clear and ambitious goals
- Narrow focus, meeting customer
demands and possessing high technology - Close ties and direct contact with clients
- Sustained innovation in product and processing
- Distinct competitive edges in products and service
- Maintaining core abilities on its own
- Aiming for more businesses instead of more leadership, valuing staff potential development
- Leaders’ authority in fundamental issues and participation in specific businesses, high attention to selection of executives
This book also gave a few examples, including Karcher.
Karcher was sited in a small town Winnenden in Baden-wurttemberg, German, which has a
population of only 20,000. Karchi has been developing steadily since 1937. In
the fiscal year of 2015, sales exceeded 2.22 billion euros (about 16.537 billion
yuan), and 12.87 million machines were sold, occupying 70% of the global
industry.
From the outset, Karcher was primarily a producer of heating technology products. In
1950, the company developed the first hot water pressure washer in Europe, and officially
entered the cleaning industry. Since 1974, it has begun to focus on
high-pressure cleaning. Although the company has gradually expanded to
non-professional terminal consumer markets such as indoor cleaning and
horticultural cleaning, high-pressure cleaning equipment and services have
always been its main business line.
Kärcher was founded by Alfred Karcher as a water treatment company in 1935. In 1950,
Kärcher started the production of high-pressure cleaning equipment and invented
the first hot water washing machine in Europe, DS 350 steam jet. In 1959,
58-year-old Alfred Karcher passed away. In the next 30 years, the company was
directly controlled by his wife Irene Karche.
In 1974, after trying a diversified business, Kärcher focused on the high-pressure
cleaner, and changed the product color from blue to the later famous Kärcher
yellow.
In 1984, Karcher entered the consumer business with the first portable pressure
washer.
In 2001, the water treatment business began. In 2009, the garden business was
opened up. In 2013, Kärcher changed the color of professional cleaning products
from yellow to gray. So far, it has developed more than 3,000 products and
maintained as a well-deserved champion in the field of high-pressure cleaners.
The current product line is in two categories, personal household and
professional products.
Household products include high-pressure cleaners, vacuum cleaners, sweeper robots, steam
cleaning products, etc. It is worth mentioning that a function of Kärcher on
the sweeper a few years ago (automatically sucking the garbage from the sweeper
into the charging stand) was borrowed by the sweeping robot leader iRobot. A
product that came out a few years ago, Window Vacs, was also intimated by quite
a few plants. Now the high-pressure cleaner remains as the core business of
Karcher.
Professional products include a variety of commercial vacuum cleaners, washing machines,
cleaning equipment, etc.
So far, Kärcher has sold its products to more than 140 countries around the world.
At present, 85% of Kärcher’s sales are contributed by overseas companies. In
the 1990s, Kärcher entered China and established a sales subsidiary in Shanghai
and a production company in Changshu, Jiangsu.
Karcher basically covers most of the channels, DIY supermarkets, department stores, TV
shopping, supermarkets, e-commerce, etc.
As of 2017, Kärcher’s sales were 2.501 billion euros. As can be seen from the
chart below, Kärcher’s sales ranged from 200 million euros in 1985 to 2.5
billion euros today.
Since Karcher opened its first branch in France in 1962, it has set more than 110
branches in 67 countries around the world, with more than 12,304 employees,
including more than 900 R&D engineers. 6% annual sales was invested in
research and development.
Karcher has more than 1,740 patents. It is also constantly innovating in products. What
is interesting, 90% of the Karcher product lines are less than 5 years old.
Kärcher has adopted a very interesting strategy in marketing: cleaning attractions well
known in the world, including Egyptian Sphinx, the Christ of Rio, the Statue of
Liberty, and the American President.
Despite Kärcher tops in the high-pressure cleaner business, it still faces strong
competition from the following opponents:
–
Nilfisk
–
Annovi Reverberi (AR)
–
Stihl
–
Briggs&Stratton
–
BOSCH
–
TTI
–
Generac
–
Stanley
–
Makita
–
FNA Group
–
Lavorwash
–
Sun Joe
Among them, Nifisk from Denmark and AR from Italy are the strongest rivals in the
field of high-pressure cleaners.
In addition, a large number of Chinese contract makers (Yili, Anlu, Lutian) are chasing
Kärcher in the low-end market, exerting so much pressure on Kärcher that
Kärcher has begun to use recycling materials (the official reason is for the
ecology).
But sometimes subversive threats may come from unknown opponents.
Power
tool plant Positec rolled out a handheld high-pressure cleaner fitted with lithium
batteries, which boasted sales of 100,000 units that year.
Going cordless has been popular among high-pressure cleaners. LEXY once tried the
development of high-pressure cleaners before, but proved unsuccessful. This
time, it took the chance to introduce a cordless lithium-ion handheld
high-pressure cleaner, in ways to re-enter this market. As far as I know, there
are still several companies specializing in cordless handheld high-pressure
cleaners, but Karcher has not yet had this business. In the competition of cordless
high-pressure cleaners, it sees no advantage.
Whether the cordless high-pressure cleaner will replace the corded ones remains a
question for Karcher. Given the development of power tools and vacuum cleaners,
going cordless seems to be inevitable. Yet then Kärcher will see minimal
technical advantages in high pressure cleaner products. The challenge brought
about by new technologies always confuses the industry leaders. To follow the
trend may affect the existing business; otherwise, the business may be knocked
out once the new technology becomes mainstream.