New record for air conditioning export over the past fifteen years
After the several years of eager anticipation, air conditioning export has finally achieved two historic breakthroughs in the 2017 cold year. Both volume and amount of export hit a new record.
It is shown from customs data that the export volume of domestic air conditioning reaches 51.45 million units in 2017 cold year, up by 10.6% compared with last year. The amount of export sums up to 10 billion dollars, up by 3.5% compared with last year. Reviewing the export situation over the past ten years, the export volume always lingered on about 40 million units. In addition, the export dropped sharply due to the global economic decline between 2014 and 2015.
As for regions, the exports to North America, Europe, Asia and Latin America all have different levels of growth. Moreover, exports to North America and Asia set a new record. However, exports to Africa and Oceania decrease slightly.
North America: new record. Expectation: increase
It is expected that the export to North America will increase. In 2017 cold year, China exported 11.12 million air conditioners to North America, up by 20% compared with last year. In 2017, the temperatures of Southwest America constantly broke the record. In addition, the uncertain tax reform policy of Trump’s administration also affected China’s export, which will also have a certain pressure on next cold year’s export.
As for products, window units led the export, and split air conditioners were more and more recognized in America. Demand for mobile air conditioners also increased. The export of mobile air conditioner grew by 41% compared with last year, and export share also increase from 16% to 19%. It is reported from companies that the growth of mobile air conditioner is due to two reasons. On the one hand, market demand increased. On the other hand, export companies strengthened the development of the market. As for economy, among the major countries, America is expected to grow by 2.1% in 2017 and 2018. Due to the strong domestic demand and economy development, Canada is also expected to increase in 2017. Based on the above analysis, export from China to North America is expected to grow by 5.3% in 2018 cold year.
Asia: new record. Expectation: decrease
It is expected that the export to Asia will decrease. Asia is the biggest market of China’s domestic air conditioner. In 2017 cold year, the export volume is 22.12 million units, up by 10%. Among them, Southeast Asia is the most promising market. With the deepening of ASEAN economic integration, Southeast Asian manufacturing has some new opportunities. Besides, due to the intrinsic attraction of climatic condition and population structure, companies such as Panasonic and Mitsubishi started to set up factories there. However, due to the low summer temperatures in countries such as Vietnam, Malaysia, Thailand and Singapore, more and more export companies are concerned about it.
However, situations are quite different in Japan. It has experienced the record high temperature in this summer. The sale of domestic air conditioner continues to increase, up by 18% compared with last year, while the inventory decreases. In addition, Japan’s economy shows a strong growing trend, expecting a 6% increase in the next half. Meanwhile, Japan’s consumption tax will be implemented until October, 2019, and it is expected that there will be a big growth before the implementation.
India is the most outstanding one among Southeast Asian countries, growing by 61% compared with last year. There are three reasons. Firstly, summer temperature in India is higher than the average level. Secondly, growth of economy and disposable income will also promote the growth of consumption. Thirdly, development of real estates and infrastructure will also motivate the air conditioning market in India. In addition, India has a quite low home appliance popularity rate. As a result, there is large growing space in Indian air conditioning market.
China exported 7.87 million units domestic air conditioners to Middle East areas in 2017 cold year, growing slightly compared with the same period in 2016, which is 1.6%. At present, the demand for replacing the window air conditioner is great in Middle East market. However, influenced by political uncertainty, it is not so optimistic.
Europe: increase. Expectation: decrease
On the basis of 109% strong growth in 2016 cold year, the growing trend of export to Europe starts to slow down in 2017 cold year, up by 15%. In 2017 summer, both South and West Europe was successively swept by heat wave, and domestic air conditioner sold quite well. These countries include France, Spain, Bulgaria and Romania. However, Russia, the biggest air conditioning market in Europe, is a sharp contrast. Russia’s economy recovers gradually, Rubble rises slightly after two years depreciation, the price of petroleum rises again, and purchasing power and desire of citizens both increase. However, due to its lower temperature, the sale volume of air conditioning decreases. It is expect that domestic air conditioner’s export to Europe will drop by 4% in 2018 cold year.
Latin America: slight increase. Expectation: weak
After plummeting over the past two years, the number of China’s export to Latin America is 6.87 million units, up by 3%. It cannot be seen as a new growing cycle, but it illustrates that the hardest times have been gone. There are two reasons. For one thing, Latin America’s economy recovers gradually. For another thing, with the economy recover, the purchasing power of local consumers is released. Therefore, the export to Latin America will increase.
Mexico, Brazil, Argentina and Paraguay are the biggest exported countries in Latin America. Among them, Mexico and Paraguay have a growing trend while Brazil and Argentina still decrease. Mexico has three advantages: low labor cost, geographic location and free trade, but its economy deeply rely on America. Especially after Trump entered the White House, the situation between America and Mexico was quite intense, which largely influenced Mexico’s economy. It can be concluded from above that China’s export to Mexico will be stable but the growth will be limited. Affected by successive price dropping of its exported products, high inflation and constant political turmoils, Brazil’s construction industry and HVAC products sale is dismal. However, Brazil recovers gradually from its weak economy. China’s domestic air conditioner export to Brazil is mounting, but still faces severe challenges. It is expected that Argentina’s economy will grow by 2.7% in 2017. However, three reasons intensify the uncertainty, including the depreciation of Peso, inflation and October’s mid-term selection. Paraguay has a big home appliance market, and air conditioners are sold the best. Paraguay belongs to tropical country and with a high temperature. Therefore, the demand for air conditioning is great.
Africa: increase. Expectation: slight increase
In 2017 cold year, China’s domestic air conditioner export to Africa is 2.94 million units, down by 5%. After experiencing the rapid growth in 2015, it started to decrease from the end of 2016. Besides the export base is big in 2016, the low petroleum price also affects it.
Oceania: stable. Expectation: slight increase
China’s domestic air conditioner export to Oceania decreased slightly in 2017 cold year but the market is relatively stable. Australia is the biggest air conditioning market there. Benefiting from the housing boom and supported by increasing housing construction, it is expected a small growth in the future.
According to the expectation of IMF, the global growing rate will be 3.5 % and 3.6% in 2017 and 2018 relatively. Currently, global economy recovers obviously, global trade also starts to pick up, and the demand in international air conditioning market upswings. However, due to the political and economic uncertainty, twists and turns still exist during the recovery of export. In the long term, situations are severe but there is still a big potential market. Combining the factors of economy, politics and climate, China’s domestic air conditioner export is expected to drop by 1.5% in the coming cold year.