Due to the rapid economic growth supporting the middle class, Vietnam has become the second largest air-conditioning market in Southeast Asia, and global air-conditioning manufacturers are competing around Vietnam.
In 2011, the sales volume of Vietnam's refrigeration system market was only 660,000 units, ranking eighth among Asian countries excluding Japan and China. However, Vietnam surpassed Thailand in 2015. In 2016, Vietnam increased its ranking to third place with 1.98 million units sold, behind India and Indonesia.
According to a report by the Japan Refrigeration and Air Conditioning Industry Association, from 2011 to 2016, the global air-conditioning market grew by 2.5%, but during the same period the growth rate of the Asian market reached 34.3%, and the sales of air-conditioning in the Vietnam market tripled to 150 billion yen (according to the time The exchange rate is about 1.35 billion U.S. dollars).
Vietnam's growing wealth has driven the rapid expansion of the air-conditioning market. Vietnam's economy is growing at an annual rate of 7%, and its growth rate ranks first in Southeast Asia. In developing countries, refrigerators and washing machines are usually the first white goods to become popular. Once the per capita gross domestic product (GDP) reaches US$3,000, the demand for air conditioners will increase sharply.
In 2017, Vietnam’s per capita GDP was approximately US$2,300, but the per capita GDP of Ho Chi Minh City exceeded US$4,000, and the per capita GDP of Hanoi reached more than US$3,000. Large cities and other places have very strong first-time purchase demand for air conditioners.
Daikin air conditioners displayed in an electrical store in Hanoi
Some air-conditioning companies, such as Japan's Daikin Industry Co., Ltd., have noticed the dynamics of the Vietnamese market and are increasing the local air-conditioning production. Daikin invested 10 billion yen to build a factory with an annual capacity of 1 million air conditioners on the outskirts of Hanoi. The plant will use the technology accumulated in India to introduce an advanced production line to reduce inventory and shorten delivery time. Daikin also has an annual production capacity of 2.5 million air conditioners in Thailand, and its Malaysian plant has an annual production capacity of 1 million units.
The Daikin Hanoi plant also has a training center, which is expected to train 10,000 local production, installation and maintenance technicians by 2020. Some of these workers may be sent to Japan. Daikin plans to receive most of the students from local retailers, but is also exploring partnerships with local technical colleges to acquire more top talents.
The Daikin Hanoi factory uses a unified workstation to modularize the main tasks such as welding and assembly. In this way, just connect these modular tasks to the power supply, and you can easily connect to the production line. This allows the production line to be quickly assembled like Lego bricks, which can improve the ability to respond to air conditioning needs according to changes in the weather. In May last year, Daikin opened a large factory in Texas, USA, using the same system.
The factory will also use the Internet of Things technology, using sensors to monitor the production speed in real time and detect equipment failures or delays. Daikin intends to introduce this system to its global production plants, and it is likely to use skilled workers trained in Vietnam to achieve this goal.
At the same time, Daikin also intends to increase its sales and service network, by 2020 it will triple the number of its dealers to 2,000 and increase the number of maintenance centers to 25. Daikin plans to double its sales in Vietnam to 100 billion yen in fiscal year 2022 on the basis of 50 billion yen in fiscal year 2017.
In the air-conditioning industry, especially in developed countries, people usually judge the status of the company based on the after-sales service provided by the air-conditioning company, such as maintenance. Daikin hopes to invest 10 billion yen in 2020 to open a training center and exhibition center in Ho Chi Minh City as part of its new local headquarters. Daikin hopes that this facility can become an export center for maintenance and other service personnel.
Daikin predicts that its sales in Asian markets other than China will reach 274 billion yen, an increase of 9%, as of the 2017 fiscal year ending in March this year. This accounts for only a little over 10% of Daikin’s air-conditioning business, but Daikin has listed this region as a key market along with the United States.
"Considering the growth of middle-class households, in the long run, demand for air conditioners will be strong," said Masaru Toka, president and CEO of Daikin. "We will expand our sales network in cities and regions, and increase Leading our rivals in terms of supply."
In addition to Daikin, other Asian air-conditioning companies are also following up. South Korea’s LG Electronics has invested US$1.5 billion in a display and air-conditioning production plant in Haiphong, northern Vietnam, to increase production capacity by 2028. Panasonic Corporation of Japan is increasing the production capacity of its Malaysian plant to expand its supply to the Vietnamese market.
Daikin and Panasonic each control approximately 25% of the Vietnamese air-conditioning market, followed by LG, South Korea’s Samsung Electronics, and Sweden’s Electrolux. As consumers pay more and more attention to the energy efficiency and performance of air conditioners compared to low prices, the reputation of Japanese brands in Vietnam is increasing.
Daikin's sales in Vietnam have continued to grow by more than 30%. This is largely due to the introduction of high-efficiency air conditioners in Vietnam that use inverter technology. The inverter technology can control the speed of the compressor motor to continuously adjust the temperature. Although the price of a Daikin inverter air conditioner reached 12.7 million VND (approximately US$558), which is 30% higher than the price of LG's competing products and more than 80% higher than the price of products from Chinese companies, the manager of a local electronics store in Hanoi Said that Daikin Air Conditioning is still the best-selling air conditioner product in the store.
A 64-year-old man in Hanoi said that he recently bought two Daikin air conditioners because the LG air conditioners he bought were too noisy. He conducted a research on the quietest and most energy-efficient air-conditioning models on social networking sites in advance.
With a population of 93 million, Vietnam is one of the most populous countries in ASEAN. Compared with the maturing Malaysia and Thailand air-conditioning markets, Vietnam is regarded as a more potential air-conditioning market. According to data from the British research company Euromonitor International, only 17% of Vietnamese households had an air conditioner last year, and the Vietnamese air conditioner market is expected to grow further.
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