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Competition healthy for survival

Competition healthy for survival

Competition among Chinese manufacturers has helped propagate the idea of high-quality China-made products, said Peck Zhao, senior marketing manager, overseas sales, Midea Commercial Air Conditioner.

Zhao was giving an interview to the media during a tour of Midea’s Research and Development facility in China.

The interview was part of a press trip organised by the company in collaboration with its Dubai-headquartered distributor, Taqeef.

Zhao said: “Nobody can really survive independently in this market. If you try, you will fail! Everybody is competing and cooperating at the same time.”

Midea has partnerships with brands such as Carrier, Hitachi and Toshiba.

He said: “Hitachi is now acquired by Johnson Controls and we are competing together. But we are also using some of their components. Even Toshiba is our partner. But in the VRF sector, we are competitors.”

READ: Experts: VRFs could still have a larger market share in Middle East

But competition is a good thing, said Zhao. “It helps us grow together. Also, this benefits Chinese manufacturers. It helps thwarting the wrong perception that China-made products are of low quality. We also need distributor companies like Taqeef to believe in brands as Midea.

“Moreover, the media is shaping the direction of how people think, because in the real world China has already changed.

“The concept of low-quality ‘Made in China’ products was 10 years ago. We now focus on only high-quality products.”

Some of the main competitors from other markets for Midea are Daikin, particularly in VRF sales, LG, Samsung and Mitsubishi Electric. However, there also exists business corporation with such companies, said Zhao.

The shift towards different business divisions by Japanese manufacturers has given Midea the upper hand. He said: “Japanese manufacturers are looking at different business fields. They may give up some of the old businesses, like home appliances and airconditioners. They are now investing in health care, robotics, new batteries, solar energy, etc.

“This is the current trend and this is very beneficial for Midea airconditioner, home appliance, and robotics businesses. But in the next 10 years, it will be difficult to say.”

There is not a lot of competition in technological innovation within the HVAC sector, according to Zhao.

“In the HVAC field there is not a very big change in technology as we have witnessed for mobile phones,” he said.

“Even though every manufacturer has new launches in VRFs, it’s hard to say that it’s a big revolution. It’s more of an evolution, such as extending the capacity, increasing the efficiency, improving the flexibility of the controller and increasing the production efficiency.”

The one field where Midea competes with others is price however.

He said: “Now we have more robots to reduce the labour costs and manage components cost. Finally, we can keep the same price as it was three years ago.

“So this is how we survive as Chinese manufacturers. In the next five years, this is also our main advantage over other manufacturers because we have huge volumes. Not only in China but also outside. So the average cost can be more competitive”.

Midea also continues investing in research and development.

“We think this will bring a big change, as we don’t know what will happen when we keep innovating. In Guang Zhou, Nansha, our factory is 100% automated. Staffs there do not need to touch anything, they only need to monitor,” Zhao said.