Chinese air conditioner makers need to improve after-sales services to appeal to foreign consumers, experts say. Xu Ruiping / for China Daily

 

Dong Mingzhu, president of Gree, says providing high-quality, after-sales services has helped her company stay on solid footing in foreign markets. Dong says air conditioner companies can use after-sales services to network with consumers and offer them more information about their brands.

"The EU and the US consumers usually have a higher expectation on after-sales services. No matter how good your products are, they won't choose your brand if you cannot provide them high-quality, after-sales service such as replacing parts or repairing the refrigeration system."

Gree has established a global sales and after-sales network in more than 190 countries and regions, with more than 1,100 stores selling air conditioners and more than 2,000 foreign employees.

Dong says there is no one-stop solution in the air-conditioning business, adding that companies have to learn how people spend in different foreign markets.

Gree operates eight factories - five in China and in Brazil, Pakistan and Vietnam - with overseas plants contributing to 20 percent of its volume. It chalked up profits of about 4.6 billion yuan on sales of 60.8 billion yuan in 2010. Sales increased 42.6 percent year-on-year.

"Thanks to a large domestic industrial chain, the Chinese air conditioning industry has already achieved a major breakthrough in developing variable-frequency and green air conditioners. Offering high-quality after-sales service could significantly improve the marketing credibility of Chinese brands on the international stage," says Feng Yanhui, a professor of mechanical engineering at Beijing University of Science and Technology.

In 2009, major Chinese enterprises stopped exporting fixed-frequency air conditioners to meet new energy efficiency standards from various foreign governments, according to the China Refrigeration and Air-Conditioning Industry Association.

But there is also some stiff competition across the globe for Chinese air conditioner makers. Japan's Toshiba and Mitsubishi, South Korea's LG and Samsung are striking hard to enter the Southeast Asian market. Sweden's Electrolux and US-based Whirlpool are two other major air conditioner sellers in the Australian market.

Su Bojiang, deputy secretary-general of the China Refrigeration and Air-Conditioning Industry Association, says Chinese enterprises are investing more in technologies.

Su says foreign air conditioning companies are aware that their Chinese competitors have been heavily promoting their brands in new markets.

Guangdong Midea Electric Appliances Co Ltd, which sold 48 billion yuan worth of air conditioners last year, is reportedly planning to heavily expand overseas this year.

A Midea employee, who asked for anonymity, says the demand for high-end air conditioners will remain high in EU and US markets. But "we will make more efforts to sell our products in Russia, India, Brazil and Southeast Asia this year. The branding campaign will be our key tactic in developing new markets", says the employee, who adds that the company is working with major retailers in foreign countries and attempting to establish joint venture companies.

Both Haier and Midea say the appreciation of the yuan as well as the increasing costs of labor, materials, chemical refrigerants, energy and transportation are affecting profit margins in China's air conditioner industry.

The China Household Electrical Appliances Association predicts the cost to export air conditioners will increase from 5 percent to 8 percent this year because of rises in costs.

Experts caution Chinese companies from emphasizing prices in competing with rivals and instead say they should stress technology and services.

Li, at the Beijing Institute of Technology, says Chinese air conditioner makers are keen on winning over foreign consumers by using their latest technologies, putting out appealing advertisements and improving after-sales service in foreign markets.