In the first half of 2017, the domestic air conditioning market in China witnessed a remarkable 30% year-on-year growth in domestic sales. This surge was driven by both scorching weather and a rising consumer appetite for premium products. Household air conditioners saw a resurgence in popularity, but central air conditioning systems proved to be even more robust, with a staggering 44% year-on-year increase.
The booming household central air conditioning segment is redefining the market landscape. "If I had to describe the current growth trajectory of home central air conditioners, I'd say it's like 'wolves emerging from the shadows'—a true market explosion," remarked Zhang Yanbin, Dean of the Ovi Cloud Network Air Conditioning Industry Research Institute. "Thanks to increasing disposable incomes and a thriving real estate market, household central air conditioners have shown strong growth trends. In 2016, they recorded a 10.5% rise, with sales reaching 73.4 billion yuan. In the first half of 2017, the growth rate climbed to 24.5%, amounting to 45 billion yuan. With ongoing renovation seasons and promotional events, we anticipate steady growth for the remainder of the year."
According to Zhang Yanbin, while large-scale commercial central air conditioning systems, such as water-cooled chillers and centrifugal machines, are experiencing slower growth rates, multi-split and unitary systems are performing exceptionally well. In the first half of 2017, the multi-split market share grew by 5.1%, marking a 50.7% increase, while the unitary system market share rose by 1%, showing a 19.3% jump. Many major air conditioning firms have begun integrating their unitary systems into their household air conditioner distribution networks.
Aux was among the pioneers to take this step. Liu Yongwen, Deputy Manager of the Domestic Marketing Company at Aux Air Conditioning, noted this shift: "Previously, I worked in the household sector; now, I’m in the commercial realm." He emphasized that integrating home and commercial businesses fosters mutual benefits, starting with product offerings. "As awareness of home central air conditioners grows, homeowners might opt for branch units for living rooms and kitchens, paired with split units for bedrooms, making better use of indoor space." This integration also streamlines distribution channels, allowing dealers to handle both segments, enhancing profitability. Additionally, shared media and customer resources can reduce costs. However, Liu acknowledged that significant differences remain between home central air conditioners and traditional household units, necessitating tailored sales strategies and channel expansions.
Haier’s Home Central Air Conditioning Planning Director, He Wei, revealed that the company integrated household and commercial air conditioning products in June this year, leveraging ordinary household air conditioner networks to boost home central air conditioner sales. He also mentioned Haier’s plans to promote the concept of "full house integration" to support this transition.
Zhang Yanbin attributes the explosion in home central air conditioning primarily to three factors. Firstly, the rapid growth in disposable income is a key driver. Over the years, Chinese residents' incomes have steadily risen; in the first half of 2017, per capita disposable income grew by 7.3%, providing the economic foundation for home central air conditioners. Coastal regions and southern China, with their higher economic levels, remain the primary markets, particularly in East China, where growth rates and market shares are most prominent. Jiangsu Province leads in these metrics, with its first-half 2017 growth rate being the highest. Beijing, due to renovations and消费å‡çº§, also saw substantial increases in home central air conditioning adoption.
Secondly, changes in apartment structures provide objective opportunities for home central air conditioners. In the first half of 2017, transactions for smaller residences (below 90 square meters) dropped by 8.5%, while those for larger homes (above 90 square meters) increased by 21.5%, along with a 27.2% rise in villas and high-end apartments. Traditional household air conditioners suffice for smaller spaces, but larger homes or luxury properties require more advanced solutions.
Thirdly, heightened public awareness and advancements in compact central air conditioning systems, coupled with channel integrations, have mutually supported growth. Ding Jin of Dajin (China) Investment Co., Ltd., concurs. He highlighted that Dajin introduced home central air conditioners to China around 2002 and remains a leader in this domain. Initially, Dajin recognized China’s vast housing market potential and consumer purchasing power. Decades of effort have now opened a promising future. "We’re committed to advancing the culture of home central air conditioning."
Currently, Gree, Midea, Daikin, Hitachi, and Haier dominate the central air conditioning market. Daikin leads in the multi-split segment, while Hitachi has rapidly grown in the multi-line category. Gree and Midea follow closely, with Haier and others catching up. Domestic brands, holding 55.5% of the market, are poised for further gains.
Zhang Yanbin noted that home central air conditioners depend heavily on real estate compared to standard air conditioners, which are more influenced by weather and sporadic demand. Home central air conditioners represent消费å‡çº§, ensuring sustained, rapid growth. Although growth rates may decline slightly as the base expands, predictions show a 34% growth from 2014-2016, dropping to 26% by 2020. Despite this, the absolute numbers will continue to grow significantly.
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