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A glut of air conditioners taking shape
www.chinaview.cn 2005-10-26 21:01:24

    BEIJING, Oct. 26 (Xinhuanet) -- China faces the possibility of stockpiling nearly 30 million units of air conditioners next year, the Beijing Daily reported on Wednesday.

    Quoting sources with the Market Economy Research Institute of the State Council Development and Research Center, the report said that by the end of first half of this year, air conditioners churned out by China's top 10 producers reached 75 million units.

    The country's total output of air conditioners came to 80 million units during the January-June period, up 23 percent year-on-year, or 15 million more than the same period of last year.

    However, the domestic demand is estimated at around 50 million units a year.

    Haier and Gree, two name brands of Chinese appliances, claimed that their output capacity each has reached 10 million units a year. Guangdong-based Midea said that it would increase its production capacity to 11 million units this year.

    Meanwhile, TCL plans to invest 260 million yuan (32 million US dollars) to build a second air conditioner production base in Wuhan, capital of central China's Hubei Province. With the operation of the base, its annual output capacity will increase to 5 million units.

    Galanz in Guangdong also said that its capacity will soon increase to 15 million units a year.

    Although China's air conditioner industry has been growing fast over the past years, its international market share is slim due to foreign technical barriers.

    In 2004, Galanz exported only 1.557 million units, and Gree, 1.539 million; Midea, 1.37 million, according to statistics from the General Administration of Customs.

    The report concluded that the industry is facing again the dilemma of a rapid expansion of production capacity on the one hand, and an oversupply in the domestic market on the other hand.

    That has caused a "price war" among air conditioner producers due to cut-throat competition.

    So far, 48 name brand air conditioner manufacturers have a market share of less than one percent each, according to the paper.

    An official with the State Information Center said that there are now 69 domestic air conditioner name brands, predicting that the number would reduce to 25 in the year 2006.

    Experts believe that in the coming years, new and "healthy" airconditioners will be the long-term development goal of the industry, as most producers now have no problem meeting the energy-saving standard required by the state. Enditem

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