Laborers work on an air-conditioner production line at a factory of the Haier Egypt Ecological Park in the 10th of Ramadan City, Sharqia Province, Egypt, on May 1, 2024. (Xinhua/Ahmed Gomaa)
BEIJING, Sept. 20 (Xinhua) -- Since the beginning of this year, China's air conditioning (AC) industry has faced various pressures such as sluggish domestic market demand and intensified price competition. But with the trade-in policy coming into effect and optimized market environment, the AC industry is bound to usher in new development opportunities, said Wang Lei, secretary general of China Household Electrical Appliances Association.
-- Pressure on domestic AC industry
From August 1, 2023 to July 31, 2024, the retail volume of household air conditioners in China's domestic market increased by 0.5 percent year on year, while the retail revenue fell by 3.2 percent year on year.
Wang attributed the weak sales performance in AC market to multiple factors, including weather conditions, weak demand in the terminal market, excessive inventory and intensifying price competition.
As of the end of June this year, the industry's total inventory has amounted to about 50 million units, reaching the highest level in the past two years, said Yang Chao, deputy general manager of home appliance department of All View Cloud.
Apart from the stagnant AC sales and excessive inventory, rising prices of major raw materials have also imposed challenges to AC manufacturers.
Copper, a key raw material for air conditioning condensers and evaporators, has seen a continuous surge in prices this year, approaching a high of 90,000 yuan per tonne, putting certain cost pressures on air conditioning manufacturers.
Despite these challenges, some companies have still yielded impressive results. In the first half of the year, Haier Air Conditioning's profit margin increased by 1.4 percentage points, and its high-end brand, Casarte, has increased its market share in the segment above 15,000 yuan.
In the same period, Midea's heating, ventilation, and air conditioning business achieved a revenue of 101.461 billion yuan, with a year-on-year increase of 10.28 percent.
-- Expanding overseas market
Since the beginning of this year, China's AC exports have continued to grow rapidly. Data from the General Administration of Customs showed that from January to July of this year, China's AC export volume reached 43.12 million units, up 24.1 percent year on year.
In the first half of this year, TCL's AC export order volume increased by 28.6 percent year on year. With the continuous high temperatures, it is expected that the export volume will continue to rise, said the person in charge of TCL's AC overseas market.
It is introduced that for the overseas market, TCL launched differentiated products according to local needs, laying a solid foundation for overseas business growth. In the first five months of this year, TCL's AC shipments in Thailand reached 200,000 units, surpassing the annual shipments of 2023.
On August 14, the foundation ceremony of Haier's air conditioner factory was held in Chonburi, Thailand. The factory covers an area of about 324,000 square meters, with an overall planned annual production capacity of 6 million units, mainly producing a full range of products such as split air conditioners and home central air conditioners.
As a large-scale research and development and manufacturing center for Haier Air Conditioning's global market, the products of the factory will be exported to North America, Europe, Southeast Asia, Korea, Japan, and other places to meet the needs of users in different regions.
Gree, another leading enterprise in China's AC industry, has seen its products being sold in more than 190 countries and regions worldwide, with its self-own brand accounting for nearly 70 percent of the total export sales. In the first half of 2024, Gree's total foreign sales revenue reached 14.825 billion yuan, a year-on-year increase of 15.64 percent.
-- Gaining momentum
The popularity of household air conditioners in China has now reached a high level. Data from the National Bureau of Statistics shows that, as of the end of 2023, the number of air conditioners per 100 households nationwide reached 145.9 units.
The trade-in policy is an opportunity for AC industry. In August, the Ministry of Commerce issued a guideline that local authorities should use central and local funds to provide trade-in subsidies for individual consumers who have purchased eight types of home appliance products with energy-saving standards.
As the trade-in policy for home appliances comes into effect, air conditioners that boast top-tier energy efficiency are likely to reap the greatest benefits from the policy, said Liu Long, senior research manager at GfK.
Currently, climate change has led to an expansion in the demand for air conditioning globally, presenting new market opportunities for AC companies. However, market growth also places higher demands on China's AC industry to strengthen energy conservation and environmental protection and to fulfill its social responsibilities.
Wang calls on AC manufacturers to shift the focus on consumer needs and product innovation, optimize product structures, save costs, and continuously improve product quality and services.
(Edited by Tian Shenyoujia with Xinhua Silk Road, tianshenyoga0524@163.com)
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