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 4000 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.

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.

The premium strategy can be an effective strategy for AC manufacturers to expand their value propositions but the premium is not always equal to the high price. Many Chinese AC companies do not currently have premium products but premium brands. This Olympic year could be a great opportunity for Chinese traders to develop their brands from Made in China to Created in China by adding additional features to products to continuously meet consumer demands. For example marketing experience in retail chains and extensive tracking services of foreign brands can allow consumers to enjoy their premium experience.

Better services

The so-called 30% manufacturing and 70% installation features for AC products as well as their seasonality have played a major role in aftermarket services of AC products. Chinese AC manufacturers are now being tested on all fronts from aftermarket premises installation speeds and quality guarantees year for cleaning and maintenance issues. These are also challenges for AC companies who hope to establish themselves



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