Air Conditioners

China produces 60% of the world's air conditioners. Recently, intense competition and a shortage of compressors have resulted in a consolidation of the industry.

Now you can tap the new sourcing opportunities presented by this streamlining, with profiles of 50 leading air conditioner manufacturers from China's main production centers.

Use this detailed information to benchmark suppliers and pre-qualify those that are best prepared for the industry's shake out.

Your copy of this report also provides a detailed industry overview, including new product developments, price forecasts and information on other issues that will impact your sourcing in the next months ahead.

What you'll get

Deep profiles of 16 leading manufacturers, providing critical facts on export capacities, R&D and QC facilities, and material and component sourcing plans. Based on factory tours and personal interviews with senior managers, this information is not available anywhere else

Short profiles of 34 additional suppliers with key information such as production capabilities, output ratios and product-development emphases

The results of Global Sources' latest supplier survey, summarizing price, product and other projections for the next 12 months

A Product Gallery of 97 best-selling export models with detailed specifications and full-color pictures

This report covers: window air conditioners, portable air conditioners, floor-standing air conditioners, wall-mounting air conditioners and central air conditioners

How you'll benefit

Discover if China-made air conditioners meet your ERE and COP ratings, and which ones are made with the latest AC technologies

Be among the first to learn of major suppliers' new product launches for 2005

More accurately judge the comparative benefits of sourcing air conditioners in Guangdong vs. Zhejiang provinces

Get quick-to-use summary listings of all featured suppliers, with easily comparable statistics and verified contact details, including website addresses

Executive summary

China is the world's largest manufacturer of household appliances, and accounts for about 60 to 70 percent of global output of air conditioners. In 2003, the country exported 16.2 million units valued at US$2.5 billion. Increased demand from local and international markets in 2004 put the figure at US$3.3 billion for the first nine months of the year. Most of the output was exported to the European Union, North America and Asia.

Despite increasing exports, the number of air conditioner suppliers in China has been shrinking by roughly 60 percent annually since the 1990s. About 200 suppliers are operating in the country today. They include large publicly-listed and foreign-invested companies with substantial capital investments and large production capacities, and midsize and small privately owned companies. While the large and midsize companies can manufacture the major components such as condensers, evaporators, plastic parts and frames in-house, the small suppliers — which are mostly assembly workshops — normally outsource most of these parts.

The following are the major highlights we see in China's air conditioners export industry:

• The sector will consolidate further in the near future. High R&D investments needed to stay competitive in the industry, component shortages, and rising raw material costs are some of the factors leading to consolidation.

• Intense competition, particularly from the conglomerates, is also forcing many small makers to drop the line and focus on other household appliances.

• Despite the consolidation, output and export forecasts for 2004 and 2005 are optimistic as local and domestic demand continues an upward trend.

• Having been hit by a severe compressor shortage in 2004, China air conditioner suppliers have already started taking steps to avoid a similar situation in 2005. The 2004 crunch had resulted in several small and midsize companies not being able to meet their orders, while others, including large makers, had to wait for their supply of compressors, thereby delaying deliveries by weeks, and even months.

• The continuing power cuts in China, particularly in Shanghai and Zhejiang, might also marginally hamper production in 2005, but by and large, suppliers are well prepared for the power shortages.

China suppliers produce most types of air conditioners including portable, window-type, wall-mounting, floor-standing, and central air conditioners. Growth is expected in the production of more value-added products and niche products such as portable models.

To remain competitive, suppliers are investing in ways to apply new technology to differentiate themselves from competition. Most makers are raising the energy efficiency of products based on the international EER (energy efficiency rating) and COP (coefficient of performance) rating.

Industry overview

China's air conditioner industry is going through a period of intense consolidation, with the number of companies sharply declining by about 60 percent annually since the late 1990s. Currently, there are about 200 suppliers in China, with the majority being midsize companies.

The price and competitive pressure on small companies is so intense that a large number of them are expected to shut down by the end of 2005. However, increasing demand for air conditioners in domestic and export markets will result in a rise in output and exports.

Three major factors are causing the industry to consolidate. First, the amount of investment, specifically for R&D and product development, required to remain competitive is outstripping the resources of small makers. Only large local suppliers and foreign-invested companies are making significant headway in R&D.

Second, small and midsize makers without ready access to compressors and other components — including refrigerants — are losing to established companies with longstanding relationships with component suppliers.

Third, rising material costs, including those of aluminum, copper and plastic, are putting small companies further at a disadvantage.

To stay in business, small and midsize suppliers are forming joint ventures with established local or foreign companies, while large companies have been merging with air conditioner component suppliers to strengthen their position. The result is an overall decline in the number of suppliers, but an expansion of output.

Industry composition
Large publicly listed and foreign-invested companies dominate the air conditioner manufacturing industry in China. These companies mainly cater to the export market and therefore usually focus on high-end products. Listed air conditioner producers include Haier, GD Midea and Guangdong Kelon, while Shunde Galanz and Henan Xinfei are foreign-invested. Multinational companies such as Fedders, Carrier and LG Air Conditioning have R&D centers and manufacturing facilities in China.

There are a number of private, locally owned suppliers that produce for the local market, as well as under OEM and OBM agreements for overseas customers. These companies include Sichuan Changhong, Ningbo Aux, Guangdong Chigo and Wuxi Little Swan.

Although suppliers have only started producing portable and central air conditioners in recent years, they have been manufacturing other major types of air conditioners. Window and wall-mounting air conditioners make up the greater part of production. Floor-standing models are available, although their output has fallen in comparison with other types due to price and technical limitations, such as high operating noise levels.

Product development is mainly focused on increasing energy-efficiency levels and adding features that improve air quality.

Samples of supplier profile

GD Midea Refrigeration Equipment Co. Ltd
GD Midea is one of the leading manufacturers and exporters of air conditioners in China. In 2003, its total sales reached 4 million units, one-fourth of which were exported. The company's 2004 sales are expected to reach 7 million units, including 2.8 million units for exports.

GD Midea is part of the Midea group which was established in 1968 and listed on the Shenzhen Stock Exchange in 1993. The group produces a wide array of household electric appliances. In 2003, it had total sales of US$2.12 billion and total exports of US$500 million.

The company acquired Hualing Holdings in November.

Air conditioners contribute 40 percent to the group's total income. GD Midea has in-house production lines for compressors, motors and finished air conditioners. It currently has more than 1,000 models of room air conditioners and more than 500 models of commercial-use air conditioners.

GD Midea air conditioners are sold in more than 190 countries and regions. The group set up branch offices in United States, Germany, Japan and Russia to study buying patterns and market trends. Exports of window-type, portable, wall-mounting and central air conditioners for commercial use comprise 30 percent, 10 percent, 50 percent and 10 percent of total volume, respectively.

Products
GD Midea mainly offers midrange and high-end units with average prices ranging from US$60 to US$200 depending on specific features and designs.

The company formed technological cooperation agreements with Toshiba, Sanyo, National, NEC, Merloni and Texas Instruments. In addition, its Shunde base has an R&D center and workstations used by engineers to conduct scientific research. In its four main production areas, there are 870 engineers and 650 R&D members.

Technological development focuses on health-giving products, as well as environmental protection and energy-saving devices. The company's innovations include golden fin, anti-rust, two-direction airflow, inverter and network controller.

In 1998, GD Midea and Toshiba set up a joint venture that manufactures compressors at the rate of 7 million units a year. GD Midea currently sources 40 percent of its compressors from this joint venture and sources the rest from Matsushita, Hitachi and LG. Compressors used for commercial-use central air conditioners are imported from Copeland of the United States.

Sample of product gallery

Wall-mounting air conditioners American Global Model: ACSH-16WO/X1 Minimum order: One FEU Packaging type: Carton Delivery time: 30 days Indicated price: • Description: Capacity 16,400BTU (cooling), 16,800BTU (heating), EER 2.91/COP 3.05; noise level 39 to 45/52 dB; air circulation 680/760; refrigerant R410A

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