Opportunities for Chinese air conditioning industry in the Olympic year

Opportunities for Chinese air conditioning industry in the Olympic year

According to survey data from domestic scientists from the state council in China, the global climate plant AC reached 89.77 million units in 2007 and China had become the AC manufacturing headquarters with 70% of world production. Although there are some general export issues and trade liberalities facing Chinese exporters, the Chinese AC industry, together with government support, has now established a relatively susceptible mechanism and technical basis for areas such as environmental friendliness and energy efficiency.

Opens all channels

In order to be exposed to the growing demand for the domestic AC market, the AC industry in China is now heading for diversified distribution channels. In the recently introduced Urban Property policy, where the government provides grants to rural residents for the purchase of approved electronic goods, the government wants to attract regional distributors to bid for eligible products so that a sophisticated commercial distribution model can be established in agriculture in China. Even though AC products are not yet in the eligible products category, AC manufacturers and franchise distributors can still use similar distribution concepts to open and consolidate third and fourth markets rural and small cities.

By the end of 2007, Gree, a major electronics brand in China, had more than 4,000 brand stores nationwide, whose sales volume accounted for 50% of Grees total. And another brand, AUX, has also announced that it will open 3000 brand stores in the country in 2008. Therefore, as the prospect of AC products becomes qualified goods in the near future and major AC brands penetrating new market segments, AC switches market in China is expected to expand further.

Based on the above reasoning, it is possible in the next few years due to the full landing of advanced products in the first and second markets, the opening of third and fourth markets, the development of internet sales channels and export market conditions, most AC distribution channels in China should have positive prospects.

More advanced performance

Research results from the state council also indicate that, on the one hand, due to improved living standards, Chinese consumers are no longer satisfied with basic temperature adjustment functions when it comes to selecting AC products. On the other hand, the governments environmentally friendly and energy efficient requirements become higher and higher. As a result, in addition to the basic temperature adjustment functions, AC manufacturers are construction products that can satisfy peoples energy efficient, healthy and modern requirements.

Regarding the health issue, two main themes, automatic cleaning and sleepiness are expected to dominate the Chinese AC market 2008. Major AC brands like Haier, Midea and AUX have all launched products consisting of automatic cleaning functions. And sleep functions, like sleep and low noise, are also the latest differentiations promoted by major AC brands in China.

Compared with the newer health question, energy efficiency and decorative properties are older but still popular. It is reported that the government will raise the energy efficiency requirement for AC products to a new level in 2009, so it is expected to see a series of new energy-efficient ACs transports promoted in 2008 and 2009. And due to recent home improvement years, many female buyers are now shopping more and more about AC panel materials, patterns and colors.

High end strategies

Due to improved living standards, Chinese exchange consumers become less sensitive to prices in 2007. On the one hand, this is due to improvements in AC technology and value-added properties. On the other hand, AC manufacturers as a whole improve their product mix in the High, Medium and Low End categories, so that the high-end market can be served better.

For product performance and prices for high-quality AC products, the difference between local Chinese brands and foreign brands is now minimal. Chinese changers have adopted a strategy to follow and refine their foreign counterparts. For example, the above-mentioned auto cleaning and sleepiness features exist in Japanese and Korean products for some time, but Chinese brands add some more items to them. In terms of price, from major electricity trading companies like Gome and Suning, the price differences between premium AC products between domestic brands and foreign brands are not significant. However, value added strategies for foreign premium brands are still not recognized by domestic brands in China.

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