In the first half of 2017, the domestic sales of China's air conditioning market surged by 30% year-over-year. This growth was largely driven by scorching temperatures and rising consumer expectations. Household air conditioners made a strong comeback, but central air conditioning systems were the real stars of the show, with an impressive 44% increase in sales.
One of the standout trends in the air conditioning industry has been the explosive growth of household central air conditioning. Zhang Yanbin, Dean of the Ovi Cloud Network Air Conditioning Industry Research Institute, described this phenomenon vividly: "The market for home central air conditioners is booming, akin to a 'wolf entering the market'—a clear sign of its rapid expansion." He noted that rising disposable incomes and a flourishing real estate market have played key roles in this growth. In 2016, the home central air conditioning market grew by 10.5%, raking in sales of 73.4 billion yuan. By the first half of 2017, the growth rate had jumped to 24.5%, generating sales of 45 billion yuan. As the renovation season kicks off and promotional events continue, this growth trajectory is expected to remain robust throughout the year.
Zhang Yanbin highlighted that while large-scale commercial central air conditioners like water-cooled chillers and centrifugal units are seeing slower growth rates, multi-zone and unitary systems are experiencing remarkable expansion. In the first half of 2017, the multi-zone market grew by 50.7%, with its market share increasing by 5.1%. Unitary systems also saw a 19.3% growth, with a 1% increase in market share. Many leading air conditioning manufacturers are integrating their unitary systems into their household air conditioner distribution networks.
Aux, a pioneer in this approach, exemplifies this shift. Liu Yongwen, Deputy Manager of the Domestic Marketing Company, shared his experience: "Previously, I worked in the household sector; now, I'm in the commercial arena." He emphasized how the integration of household and commercial businesses creates synergies, particularly in product offerings. "As people become more aware of home central air conditioning, combining branch-type units in living rooms and kitchens with split units in bedrooms not only enhances comfort but also optimizes space usage." This integration also strengthens distribution channels, allowing dealers to cater to both markets, boosting profitability, and enabling them to share resources like media and customer bases, thereby reducing costs. However, he noted that there are still differences between household central air conditioners and traditional air conditioners, requiring tailored sales models and channel strategies.
Haier's Home Central Air Conditioning Planning Director, He Wei, revealed that Haier has already integrated its household and commercial air conditioning products. By leveraging the extensive network of regular household air conditioners, they have successfully boosted sales of home central air conditioners. He also mentioned that Haier plans to introduce the concept of "full-house integration" to further drive this convergence.
According to Zhang Yanbin, the surge in home central air conditioning can be attributed to three main factors. First, the steady rise in disposable income among residents has created a solid economic foundation for these systems. In the first half of 2017, China's per capita disposable income increased by 7.3%, with regions like the eastern coastal areas and southern provinces leading the charge. Jiangsu Province, in particular, has seen significant growth due to its robust economy and higher consumption levels.
Secondly, changes in housing structures have opened doors for home central air conditioning. Sales of smaller apartments under 90 square meters fell by 8.5% in the first half of 2017, while larger homes and luxury apartments saw a 27.2% increase. Traditional air conditioners struggle to meet the demands of spacious environments, making central air conditioning increasingly appealing.
Lastly, heightened consumer awareness and the strategic layout of smaller central air conditioners by major manufacturers have fueled this growth. Companies like Daikin, which entered the Chinese market around 2002, have played a pivotal role. Ding Jin of Daikin emphasized the company's commitment to advancing the culture of home central air conditioning in China. Currently, leading players in the central air conditioning market include Gree, Midea, Daikin, Hitachi, and Haier. Daikin leads in the multi-zone segment, followed by Hitachi, Gree, Midea, and others. Domestic brands are expected to gain a larger share of the market, currently standing at 55.5%.
Zhang Yanbin concluded that home central air conditioning relies heavily on the real estate market, unlike standard air conditioners, which are more weather-dependent. This trend reflects a consumption upgrade, promising sustained growth. Although growth rates may slow slightly as the market matures, predictions suggest a 26% growth by 2020, with an even larger base.
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