Air con­di­tion­ers with ‘geek spirit’

China Daily (USA) - - BUSINESS - By FANFEIFEI fanfeifei@chi­

Chi­nese air con­di­tioner mak­ers, stung by over­ca­pac­ity and high in­ven­tory of low-end prod­ucts, are speed­ing up the trans­for­ma­tion of the in­dus­try. On the anvil are high­end, in­tel­li­gent and per­son­al­ized prod­ucts.

China’s air con­di­tioner mar­ket is con­sid­ered al­most sat­u­rated. So, man­u­fac­tur­ers are keen to seek new growth points.

That would mean per­suad­ing con­sumers to buy new prod­ucts with new fea­tures and func­tions. It would also mean mak­ing prod­ucts as per the re­quire­ments and ideas of con­sumers, par­tic­u­larly the younger lot.

Stated dif­fer­ently, the fo­cus has shifted away from price wars in the highly com­pet­i­tive low-end mar­ket.

No other com­pany sym­bol­izes the new think­ing bet­ter than Aux Group, a maker of ap­pli­ances based in Zhe­jiang prov­ince.

Aux has in­creased in­vest­ment in re­search and de­vel­op­ment. Since 2013, it in­vested over 1 bil­lion yuan to im­prove the qual­ity of its prod­ucts by mak­ing in­no­va­tion cen­tral to its R&D ef­forts.

It has re­leased a se­ries of in­no­va­tive prod­ucts, such as ul­tra-thin air con­di­tioner, through co­op­er­a­tion with smart­phone maker Xiaomi Corp. Users can re­mote-con­trol their air con­di­tion­ers us­ing Xiaomi’s smart-home apps.

Xu Zhong, mar­ket­ing direc­tor of Aux Group, said: “We pay much at­ten­tion to the con­sumers’ de­mands, col­lect their opin­ions and in­ter­act with users and fans.” He said Aux prod­ucts will be more and more fash­ion­able from now on, cater­ing to young con­sumers. The com­pany launched a new prod­uct — AYA se­ries air con­di­tioner— dur­ing the Ap­pli­ance & Elec­tron­ics World Expo 2016 in Shang­hai in March. The new prod­uct has in­tel­li­gent con­trol and ul­tra-fast cool­ing and heat­ing tech­nolo­gies among its fea­tures. The AYA se­ries air con­di­tioner, which has a sleek and arty ap­pear­ance, al­lows users to self-de­fine the run time and cap elec­tric­ity con­sump­tion. The com­pany said the prod­uct could save 30 per­cent of en­ergy and its de­hu­mid­i­fi­ca­tion ef­fi­ciency could be dou­bled. Ded­i­cated to the air con­di­tioner man­u­fac­tur­ing in­dus­try for 22 years, Aux tops sales vol­ume and rev­enue on on­line e-com­merce plat­forms. Its ex­ports as well as do­mes­tic mar­ket share grew dur­ing the Jan­uary-April pe­riod, when the whole in­dus­try was in re­ces­sion.

Ship­ments of Aux’s air con­di­tion­ers rose 9.89 per­cent year-on-year dur­ing the Jan­uary-April pe­riod, top­ping the­mar­ket list, ac­cord­ing to in­dus­try an­a­lyst China IOL.

Xu said, “We aim at post-80s and 90s gen­er­a­tions, who pos­sess strong con­sump­tion po­ten­tial. We pay at­ten­tion to the in­no­va­tion of prod­ucts and mar­ket­ing chan­nels, co­op­er­a­tion with the Euro 2016 foot­ball tour­na­ment, the com­ing sum­mer Olympic Games, and ser­vices of celebrity spokesper­sons.”

For in­stance, Aux in­vited ac­tor Zheng Kai as the global chief ex­pe­ri­ence of­fi­cer for its AYA se­ries air con­di­tion­ers. It also bagged the ti­tle spon­sor­ship of Jiangsu TV’s pop­u­lar ed­u­ca­tional pro­gram Who’s Still Stand­ing.

Although the air con­di­tioner mar­ket is wit­ness­ing low growth, Xu said, “The third- and fourth-tier cities were our fo­cus ar­eas in the last

two years, and we are build­ing up a new brand im­age and sales team and of­fer­ing ex­cel­lent after-sales ser­vice.”

He said Aux saw op­por­tu­ni­ties in a slug­gish mar­ket. He is op­ti­mistic about the sales growth this year. “We are hop­ing for a 30 per­cent growth com­pared with last year.”

Liang Zhen­peng, a con­sumer elec­tron­ics an­a­lyst, said, “Aux has shown the world that it could find a new way to growth, and its sales growth proves it has gained recog­ni­tion among con­sumers, stand­ing at the fore­front of man­u­fac­tur­ing re­form and upgra­da­tion.”

Aux aims to meet the de­mands of young users and hence is ex­pand­ing its in­vest­ment in raw ma­te­rial se­lec­tion, R&D, in­no­va­tion, man­u­fac­tur­ing, qual­ity man­age­ment and other key links of pro­duc­tion, so that it could launch su­pe­rior qual­ity prod­ucts. All this en­cap­su­lates the com­pany’s “geek spirit”, said Liang.

He said Aux also fo­cuses on on­line dis­tri­bu­tion chan­nels, in line with the gov­ern­ment’s stress on the ‘In­ter­net Plus’ strat­egy.

Sta­tis­tics from AVC, a con­sult­ing com­pany that spe­cial­izes in home ap­pli­ances, show sales vol­ume and rev­enue of Aux’s air con­di­tion­ers on on­line plat­forms ac­counted for 19.3 per­cent and 22.7 per­cent of the mar­ket share in April, giv­ing it the top spot.

In­dus­try ex­perts said the younger gen­er­a­tion is be­com­ing a ma­jor con­sumer group, and their de­mands tend to be diver­si­fied with fo­cus on per­son­al­ized, dif­fer­en­ti­ated, en­ergy-sav­ing and en­vi­ron­men­tally-friendly prod­ucts like in­verter air con­di­tion­ers.

Sta­tis­tics show 41.94 mil­lion units of in­verter air con­di­tion­ers were sold in 2015, ac­count­ing for 54 per­cent of the do­mes­tic mar­ket.

The sales of air con­di­tion­ers dur­ing the May Day hol­i­days wasn’t sat­is­fac­tory. Both sales vol­ume and rev­enue fell by 22.3 per­cent and 22.2 per- cent year-on-year re­spec­tively, ac­cord­ing to Chi­naMar­ket Mon­i­tor Co Ltd.

Sta­tis­tics from AVC showed the av­er­age price of air con­di­tion­ers dur­ing the May Day hol­i­days reached 3,462 yuan, up just 0.4 per­cent.

Liu Daren, gen­eral man­ager of air con­di­tioner and en­vi­ron­ment divi­sion, AVC, said, “The air con­di­tioner mar­ket has en­tered a sta­ble de­vel­op­ment pe­riod from a phase of rapid growth. The en­ergy-sav­ing in­tel­li­gent air con­di­tioner has be­come a trend.”

Fig­ures back his as­ser­tion. Although over­all sales of air con­di­tion­ers saw neg­a­tive growth in 2015, sales vol­ume of in­tel­li­gent air con­di­tion­ers in­creased by 173.5 per­cent year-on-year, with rev­enue ris­ing 98.44 per­cent com­pared with 2014.


A sales­woman sticks posters ad­ver­tis­ing in­tel­li­gent air con­di­tion­ers at a Sun­ing Com­merce Group Co Ltd's out­let in Nan­jing, Jiangsu prov­ince.

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