Japanese air conditioner manufacturers are set to expand in Vietnam, touting their high-quality products and appeal to the country’s growing urban middle class.

Enormous demand for air conditioners brings major Japanese companies to Vietnam

Leading Japanese electronics corporation Panasonic is ready to manufacture air conditioners in Vietnam, where it already has a consumer electronics factory. Panasonic’s plans to ramp up its air conditioner business in Southeast Asia, where rising incomes are fuelling demand.

Panasonic Vietnam said in a statement that its investment scale and timing schedule are not finalised at the moment, but will be completed soon.

Panasonic looks to earn $6 billion from global air conditioning sales by March 2019. The Japanese market will account for 40 per cent of this however.

Vietnam is the second biggest market for air conditioners in Asia, after Indonesia.

Another big name in air conditioning, Daikin, received an investment certificate last year for the $100 million project in Thang Long II Industrial Park.

Ly Thi Phuong Trang, a representative from Daikin Air Conditioning Vietnam JSC, said the project is on track and expected to see operation in April 2018, with a capacity of 500,000 units per year.

Japanese firms like Daikin and Mitsubishi chose Vietnam for their new plants because nearly all Daikin and Mitsubishi air conditioners in Vietnam are currently imported from Thailand, where their production facilities have been operating at full capacity.

Vietnam’s infrastructure development coupled with increasing investment in the industrial and commercial sectors are responsible for the higher demand for air conditioners in the country. The development of major cities, growing construction activities in the hospitality and tourism sectors, and growing government investment are expected to propel demand for air conditioners in Vietnam to even greater heights.

In residential areas, split system air conditioners are popular, as one unit can service multiple residences.

A report released by the Japan Refrigeration and Air Conditioning Industry Association (JRAIA) on the demand for air conditioners in major countries around the world also said that the demand for both residential and commercial air conditioners is rising sharply in Vietnam.

Some of the leading air conditioner manufacturers operating in Vietnam include LG Electronics, Gree, Samsung, Midea, Hitachi, Toshiba, Nagakawa, Mitsubishi, and Carrier.

Last year, Samsung Vina Electronics Co., Ltd. said “Fifty percent of air conditioners sold globally are split system air conditioners. The total value of the segment is worth $74 billion. Vietnam is a very promising market for this segment, which has seen many advanced technological developments recently.”

Seven years ago, Mitsubishi Electric Corporation established a Vietnamese company to co-ordinate sales of air conditioning systems, home appliances, and automated products.

The Japanese company has primarily conducted sales in Vietnam indirectly through distributors, and has only recently shifted to direct sales.

“Due to Vietnam’s remarkable growth prospects, Mitsubishi Electric is now classifying the country as a priority market, and has decided to establish a local company to co-ordinate sales,” the manufacturer said in its announcement.

While competition for greater market share is stiff, some countries in the region are moving to tighten environmental regulations. Vietnam has also raised awareness of energy consumption standards for air conditioners. The move could be a boon for Japanese air conditioner manufactures who already have competitive energy-saving technologies on the shelves.

VIR