In August 2022, the 2023 financial year of China’s air conditioner industry started.
A shortage of supply occurred due to unusual high temperature of the summer of 2022, which indicates the stimulation of untapped market potential. In this context, industry players held dealer conventions with a clear stand: It is a dealer convention for the purchase of new models instead of the replenishment of old ones, and the theme of the new financial year is health.
It marks the first time in the 30 years of China’s air conditioner history that health has been so much highlighted in marketing. In other words, China’s air conditioner industry enters an era of health following the previous stages that focus on cooling and heating, fixed and variable frequency, and intelligence and comfort.
Health-orientation is at the frontier of the industry
The strategy of “Healthy China” was proposed at the 19th National Congress of the Communist Party of China. This, coupled with the health-oriented demands stimulated amid the covid-19, drives people’s healthcare awareness to an all-time high, which lays the ground for China’s air conditioner industry to enter a health-oriented era at a full pace.
The core technical innovation direction of residential air conditioners shifts to health in the last seven years. Health orientation has become one of the three core directions of R&D along with energy conservation and environmental protection which have been the key focus of R&D for more than twenty years. It has been a core of market competition in recent years and is expected to evolve into a unique technical advantage of China’s air conditioner industry in global competition.
Combing through the development of the industry, it’s easy to tell that air conditioner industry has been through four stages: the basic function popularization stage with steady cooling and heating being the core function, the performance enhancing stage with the transition from fixed frequency to variable frequency being a key focus, the function upgrading stage with smart noise adjustment and comfortable wind-free air supply being the core functions, and the experience upgrading stage with fresh air, self-cleaning and bacterial removing being the core functions.
Air conditioner is becoming a core manager of home air, according to White Paper on the Trends of Health-oriented Home Appliances in China 2022, developed by China Appliance magazine (run by CHEAA), released on July 28, 2022.
Air conditioner becomes the core of healthy air quality in a home
China’s residential air conditioner industry started to look at room air quality in technical perspective since Haier unveiled its self-cleaning technology ahead of the industry in 2015.
Health orientation surfaces in reflection of changes in the market, the industry promotion as well as the technical R&D.
From the market side, the needs of consumers have changed from room temperature adjustment to room air comfortableness and air quality adjustment particularly after the outbreak of the covid-19.
From the industry promotion side, the sales of room air conditioners in Chinese market reached its peak in 2018, which indicates a new market pattern with replacement demands being the core driver. For industry players, meeting consumers’ upgraded demands to generate replacement demands of the market becomes a core issue to be focused. Plus, adding personalized functions to high-end products also become a necessity.
From the technical R&D perspective, the innovation technical route of China’s residential air conditioner industry have been clear and complete in energy conservation and environmental protection, and the current innovation focus is put on intelligent interaction, air quality and comfortableness and the design of the outdoor and indoor units of room air conditioners. It is learned that the health-oriented technical roadmap was clearly outlined in the Technical Roadmap of China’s Residential Air Conditioner Industry developed by China Household Electrical Appliances Association (CHEAA). Specifically, intelligent controlled, DC inverter-driven, health-oriented technologies such as self-cleaning, wind-free air, fresh air ventilation, humidity control and UV bacterial removing have been developed and iterated.
The market performance speaks for itself. Sales of air conditioners boasting health concept has been on an upward trend in 2022 when the overall market environment was sluggish and downward. Take fresh-air air conditioner as an example. In H1 2022, retail sales volume of fresh-air air conditioners surged by more than 250% YoY at online channels. Some market research companies even forecasted an overall retail sales volume of 3 million units of fresh-air air conditioners and a 10% rise of market share in the coming financial year of air conditioners.
Health-oriented functions such as self-cleaning, bacteria removing and fresh air allow enterprises to deploy diversified product strategies depending on the needs of different user groups, and therefore spur the replacement demands of the market through well-targeted solutions.
From self-cleaning to fresh air, health-oriented technology keeps upgrading
At the dealer conventions of air conditioner brands, I not only saw their common strategic focus on health, but also different interpretations. Some brands believe the technical innovations should focus on three respects: comfortable heating experience, comfortable noise level and good air quality, some believe health-oriented technology is not any single technology but a technical direction based on the optimization of basic functions, while others believe health is a tag to differentiate premium products from lower range products and health-oriented technology is a solution to some scenarios of a home.
The differences indicate that the health-oriented era of air conditioner industry is still in its primary stage where the understanding of health-oriented technologies and functions differ among industry players though their common direction is the same. History shows that technological upgrade is the only solution to the challenges a product faces in its primary stage. But what are the pain points and untapped potential of the health-oriented technologies of air conditioners?
Technical pain points drive the industry to iterate
The commonly used self-cleaning technologies include high temperature sterilization of the evaporator and the condenser, ultraviolet sterilization, and positive and negative ion sterilization, which all have their pain points to be solved, such as: (1) low range products are not capable of keeping a specific high temperature on the evaporator for a required time; (2) the weak penetration, weak radiation and short exposure time of UV; (3) the insufficient absorption time and secondary pollution of positive and negative ion sterilization and the risk of igniting flammable refrigerants in the ion generation process; (4) the high cost of absorption filter cleaning and replacement and the smart monitoring device that comes with it.
To achieve the best effect, major air conditioner enterprises usually uses a mix of different approaches to complement with each other, which in most cases was only used on their flagship models due to the high cost and the difficulty of design. The refinement of bacteria removing technology and the popularization of it is where is the industry is going.
The pain points of fresh-air air conditioners are high noise level, the temperature differences of fresh air and the air out of the air conditioner, the visibility of air quality and the design of the air inlet hole and outlet hole.
The health-oriented era has come, but related standards are still insufficient. Industry players should put more efforts in the technological R&D to address the pain points of consumers instead of compromising performance to pursuing sales number.