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issue: June 2007 APPLIANCE Magazine

China Report
China Is a Growing Market for Central Air-Conditioning


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by Viloet Han, China Correspondent

In China, central air-conditioning has been largely used in commercial applications. However, residential use is increasing rapidly.

Industry estimates value the total 2006 production of central A/C equipment at about 10 billion RMB (approx. US$1.3 billion), for an increase of 20% over 2005.

Most of the leading manufacturers of central air conditioners achieved remarkable sales gains in 2006. Midea Central Air-Conditioner, based in Guangdong Province, achieved sales of 2.5 billion RMB (approx. $320 million) in the domestic market and approximately $200 million in markets outside China. Daikin’s sales growth rate was as high as 44% and the actual sales value was 4 billion RMB (approx. $518 million). Sales volume of McQuay’s digital-scroll multiunit central air conditioner surged in 2006, with industry insiders estimating central A/C sales at around 3 billion RMB (approx. $390 million).

Central A/C sales for home use only account for about 15–20% of the total sales volume. Sales statistics provided by manufacturers indicate that most sales are to the commercial sector. Still, this equipment has promising residential market potential. One industry analyst was quoted as saying, "If the price is reasonable, household central air conditioners will replace (some) household wall-mounted types." The analyst points out that some manufacturers are already moving more aggressively into the market. For example, Chigo, a Guangdong-based OEM, launched a central A/C model with a 9999 RMB (approx. $1295) price tag, which is about as much as it would cost for three wall-mounted, split-type air conditioners.

Some OEMs are putting extra effort into making the purchase of central air-conditioning easier for consumers. Daikin owes much of its success in the market to its ProShop retail venture, launched in 2005. ProShop staff provide homeowners with consulting services and have a standardized quoting system. Store designers create installation plans that incorporate the home, site conditions, and other specific requirements of the customer. At the end of 2006, Daikin had 122 ProShops in China.

Midea launched its M-Home Experience Centers in 2006, aiming to accelerate sales of household central A/C equipment. These retail establishments seek to provide a showcase for the appliances as well as provide consultation and design, sales, and other services for central A/C and central water-heating installation.

Xu Wei, deputy director of the Institute of Air-Conditioning, China Academy of Building Research, observes that the urbanization level in China should reach 45% in 2010, giving the country a total urban population of 630 million people. He says this growth will create considerable demand for upgraded residences—and drive substantial new growth potential for central A/C.

 

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