Air Conditioning: Industry Upgrading Breaks New Ground

As Internet development gains momentum, enterprises are caught off-guard by Industry 4.0. As an important part of Chinese manufacturing industry, will air conditioning industry sink into panic or rise up to the challenge and break new ground?

In November 2010, Foreign Economic Cooperation Office, Ministry of Environmental Protection and United Nations Development Program (UNDP) co-initiated “Global Environment Facility (GEF) Promoting Energy Efficient Room Air Conditioners (PEERAC)”. Driven by technology and market, air conditioning industry removed major obstacles in R & D, production, sales and use, and industry upgrading broke new grounds.

From 2012-2013, China’s household appliance industry was in downturn. Some suppliers thought rigid demand was everything, and the fallacy “homogeneous competition” was rampant.

Following China’s newly released policies and the implementation of PEERAC, Chinese air conditioning industry is experiencing a new round of scientific revolution and industrial transformation which are deeply integrated with information technology. As a result, people and people, objects and objects, as well as people and objects are interconnected, where digitalization, networking and intelligence serve as the core.

The air conditioning industry, represented by Gree, Galanz and Haier, has made innovation in technology and development concept.

Take Gree as an example. At the China-Africa Forum in December, 2015, Gree displayed its self-dependent innovation products, such as Painting Era, magnetic suspension centrifugal machine, Rose & U Crown & Shiny residential air conditioners, TOSOT air cleaner and automatic robot. A high-tech, high-quality and innovative brand image of Chinese air conditioners was presented to the world.

Gree’s innovation starts from the supply-side structural reform, which coincides with the calling from PEERAC that supply obstacles of air conditioners must be removed via advanced technology. Based on consumers’ changing purchasing concept and the environmental requirements on energy conservation and emission reduction, air conditioning industry has revolutionized its technology and development concept in areas like energy conservation, environmental protection and green, low-carbon development.

Since 2004, China’s electricity demand has growing at an annual average rate of 11%, moreover, the supply of coal and petroleum cannot meet the increasing energy demand in China. As a major energy consumer, air conditioning industry shoulders its unshakeable responsibility to solve the problem and achieve China’s goal of cutting greenhouse gas emissions and slowing down climate change.

Variable-frequency air conditioning technology has been the keyword in energy conservation and emission reduction over the past decade, which has inspired air conditioning enterprises to cultivate the consumption demand, promote marketing and penetrate into the market. However, despite the catchword of “promoting the variable-frequency air conditioners”, numerous enterprises haven’t achieved the market penetration due to their backward technology. Since the implementation of PEERAC, thanks to the capital and technology support, some enterprises have achieved the market penetration within a few years based on their core technology and vast consumption market.

Here is a case study of Galanz. In terms of energy conservation, Galanz variable-frequency air conditioner takes the lead in meeting China’s first-level energy efficiency standard. In terms of silent technology, Galanz variable-frequency air conditioner could reduce its noise to 20 decibel via converting technique. As for stability, Galanz variable-frequency air conditioner is able to apply the 1 Hz ultra-low frequency operation technology, thus maintains a constant temperature on account of the number of people and temperature inside and outside the room.

According to the monitoring data of authoritative research institutions, from January to October, 2011, the customer sales of variable-frequency air conditioner in China were nearly 6 million sets, an increase of 60.97% from last year. Customer sales monitoring data of China’s 65 cities released by GFK also reveals that the market share of variable-frequency air conditioner jumped to 47% in the first three quarters of last year. According to China’s 12th five-year plan, by 2015, variable-frequency air conditioner’ s market share will rise to 50%, and by 2020, 80%. In the future, variable-frequency technology will become a trump card for Chinese enterprises in international market.

As the model of variable-frequency products, freon-free variable-frequency air conditioner will undoubtedly become the target of many businesses.

In 1998, Haier invented the freon-free technology to export mature variable-frequency energy conservation technology to EU. As a result, it successfully entered the freon-free variable-frequency air conditioner market. In 2003, thanks to the leading R410A freon-free technology and direct current frequency conversion technology, Haier poured its products to Europe and passed the A level certification of EUROVENT. This has made Haier the first enterprise that exports its own freon-free variable-frequency air conditioner brand to Europe in a large batch, leading the Chinese air conditioning industry into a freon-free variable-frequency era.

Innovation drives development, thus it is of strategic importance that we grasp the opportunity of Industry 4.0 to promote industry upgrading. As Made in China 2025 makes steady progress, air conditioning industry has made breakthroughs in technology and development concept, which could help strike a balance between supply and demand, achieve the sound interaction between consumers and enterprises and improve enterprises’ capability on sustainable development.