OWS Earphones and AI Smart Home: China's Breakout Categories in H1 2024

Newer data: China's Online Earphone Market: Open-Ear at 18% of Wireless

Executive Summary#

OWS (open-wearable-sound) earphones were the main story in China's audio category in H1 2024, with sales growing 219.4% YoY on a leading marketplace and the format's share of wireless earphone revenue rising from 10.2% to 17.0% in a single year. The category also split into hook-ear designs, such as Shokz's OpenFit and OpenRun Pro series, and clip-ear designs, such as Huawei's FreeClip. In smart home, growth moved away from renovation-linked products and towards security and control systems. On a leading content-led marketplace smart appliances grew 115.6% while smart aerial devices approached 250% growth, with Xiaomi extending its home appliance range through content commerce. We believe that in H1 2024 brands in both categories faced a decision on whether to invest in the new formats while the market was still forming, because the brands that moved first were building positions that would be harder to challenge later.

OWS Earphones: A Format Transition Under Way#

The OWS (open-wearable-sound) earphone category was one of the clearest examples of a format transition in China's consumer electronics market in H1 2024. Earlier audio format shifts, from wired to wireless or from in-ear to over-ear, moved along one design dimension. The OWS transition is happening in two designs at the same time, hook-ear and clip-ear, and the direction of the category depends on both.

On a leading marketplace, OWS earphone revenue grew 219.4% YoY in Jan-May 2024. Combined monthly revenue across the two leading marketplaces in our dataset rose from approximately CN¥ 110 million in early 2023 to CN¥ 353 million in May 2024, a 3.2x increase in 17 months. Sales grew on both marketplaces over the period, which we read as a sign that OWS earphones have reached mass-market awareness and are no longer a niche found on one channel.

The format's appeal rests on a real consumer problem, since standard Bluetooth earphones cause discomfort over long wear, raise hearing-occlusion concerns and block ambient sound during outdoor exercise, which is a safety issue. OWS earphones address these problems through an open-ear design while offering competitive audio quality and Bluetooth convenience at falling price points. ^[1]

OWS Format Deep-Dive: Hook-Ear vs. Clip-Ear#

The OWS category has split into two design formats, which differ in the consumers they serve, the brands that sell them and the prices they are sold at.

Hook-ear OWS: Hook-ear designs are aimed at sports and active users. Shokz, which built its business on bone conduction before moving into OWS, sells its OpenFit and OpenRun Pro series in the CN¥ 1,000+ premium tier. The price distribution in hook-ear OWS is bimodal: the below-CN¥ 200 tier takes the largest revenue share by volume, while the CN¥ 1,000+ tier takes approximately one-third of category revenue. This structure is typical of format-transition categories, in which early premium adopters and price-sensitive mass-market consumers arrive at the same time. Other hook-ear brands include Bose, a new entrant at the premium end, Skyworth's earopen brand at the budget end, and Cleer.

Clip-ear OWS: Clip-ear designs are aimed at casual and everyday wearers. Huawei's FreeClip, launched in late 2023, entered the clip-ear market with a distinctive c-shaped design that was widely shared on social media for its looks, and it introduced OWS to consumers who might have dismissed hook-ear models as too sporty. Sanag, Jinyun and Disney-licensed products compete in the same format at more accessible price points.

Bone conduction earphones, the earlier open-ear option for comfort, saw their share of wireless earphone revenue fall by 3.3 percentage points over the same period as OWS formats took their place. We believe the reason is that OWS earphones match or exceed the comfort of bone conduction while offering noticeably better audio quality, and that more mainstream brands were selling them by H1 2024. ^[2]

What the OWS Growth Means for the Broader Audio Market#

The rise of OWS from 10.2% to 17.0% of wireless earphone revenue in 12 months has several implications:

• Standard Bluetooth earphones still account for 61.2% of category revenue, and their share is falling by approximately 2.7 percentage points a year, which suggests a gradual shift towards new formats and no sudden displacement
• The share of headband wireless headphones was almost unchanged at 14.5%, so premium audio enthusiasts appear largely unaffected by the OWS trend and keep their preference for over-ear sound isolation
• The buddy camera category (earphones with an integrated camera) grew 372.9% YoY on a leading marketplace, which points to a parallel trend towards multi-function audio wearables
• Smart speakers, both with and without screens, came under pressure, and we attribute this to product homogenization and competition from learning tablets

For brands in the audio category, we believed in H1 2024 that the OWS trend meant developing OWS products while distribution slots were still available and consumer awareness of brands was still forming. Brands that entered the bone conduction format early built durable positions, and the OWS format was then approximately two years into a similar path.

Smart Home: Growth Shifts to Security and Control#

China's smart home vertical changed shape in H1 2024, as demand for products tied to home renovation eased and spending moved to security, control and newer device types.

Renovation-linked products and security: On a leading marketplace, smart bathroom products, which include smart toilets and motorized clothes drying racks, form the largest sub-category at CN¥ 6.8 billion. Their sales came under pressure as post-renovation demand normalized after the high home improvement spending of the pandemic years. The categories that grew were those built around security and control, with smart home security up 35.2% to CN¥ 3.5 billion and smart home control systems up 38.1%.

Among the growing categories, network cameras were the largest at CN¥ 2.4 billion (+37.1% YoY), helped by lower camera prices and better AI features such as facial recognition, motion detection and two-way audio. Robot vacuums held CN¥ 2.4 billion at +14.6% YoY, with the all-in-one base station the standard configuration by H1 2024, and floor washers came close to robot vacuums at CN¥ 2.3 billion (+10.8% YoY).

Content-led commerce: On a leading content-led marketplace, smart home is in an expansion phase that follows the channel's wider move into home categories. Smart appliances, the largest smart home category there at CN¥ 2.6 billion, grew 115.6% YoY. Smart aerial devices (drones) grew approximately 250% YoY, which reflects how well aerial footage suits content creation, and smart lighting grew 90.8%, as consumers adopted it both as a functional upgrade and as a visual prop for social media content. The "Other" smart home category grew 277%, which suggests that many emerging product types are selling there before they are large enough to have a category of their own.

Xiaomi's Smart Home Expansion Strategy#

Xiaomi's strategy in H1 2024 shows how an ecosystem brand can use different channels to extend its reach. Its smartphones remain the core of the ecosystem, while Mijia IoT products and large home appliances, including refrigerators, washing machines and kitchen appliances, take the brand well beyond its traditional 3C base.

In content-led commerce, Xiaomi has used its flagship store as a place where younger urban consumers who had not previously been part of the Xiaomi ecosystem discover its home appliances. This matters because the smart home audience in content-led commerce is younger and more urban, more likely to make discovery-driven purchases and more likely to share purchases as lifestyle content. That sharing works as organic marketing that lowers the cost of reaching buyers for later launches.

We believe brands that build content strategies designed for this channel for their smart home products, instead of reusing the product listings they wrote for conventional marketplaces, will be better placed to reach its fast-growing smart home audience.

About the Data#

This analysis is based on Moojing Market Intelligence's proprietary e-commerce transaction data covering Jan-May 2024 on two leading Chinese marketplaces, and figures described as being on a leading marketplace or a leading content-led marketplace refer to one of the two. Revenue figures are presented in Chinese yuan (CN¥). YoY comparisons refer to the equivalent Jan-May 2023 period. OWS (Open Wearable Sound) earphone data covers hook-ear and clip-ear format designs that use speaker proximity and directional audio instead of bone conduction or in-ear canal insertion. Smart home category definitions follow each marketplace's own taxonomy. All data comes from the Moojing Five Verticals Review H1 2024 report.

Get in Touch#

Moojing Market Intelligence helps brands navigate China's e-commerce landscape with actionable data and strategic insight.

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• Footnotes

^[1] IDC China, "Wearable Device Market in China, 2024 Q1 Forecast," April 2024. The OWS (open-wearable-sound) format encompasses any earphone design that delivers audio via proximity to the ear canal without insertion, including hook-ear (air-conduction sports design), clip-ear (c-shaped clip design), and tilt-ear designs. Market analysts project the OWS format to represent 25-30% of wireless earphone revenue by 2025 if current growth trajectories continue.

^[2] Strategy Analytics, research on the China true wireless stereo earphones market, Q2 2024. The bone conduction format faces a structural challenge as OWS audio quality has improved to near-parity with bone conduction at competitive price points, while OWS designs offer superior comfort and more mainstream aesthetic appeal for non-sports use cases.