TCL bets on 'intelligent homes'

Chinese consumer electronics giant TCL Corp is bullish on the prospects of the domestic air conditioner market, which enjoys great development potential, as annual sales of its air conditioners are set to surpass 10 million units by the end of this year.

"TCL has achieved eight consecutive years of rapid growth and is the fastest growing enterprise in the air conditioner industry. We will strengthen internal synergy and cooperation with our partners, as well as increase mergers and acquisitions in the future," said Li Shubin, vice-president of TCL.

In the past three years, TCL has spent more than 500 million yuan ($76.4 million) on the R&D of air conditioners, and invested 220 million yuan in this area in 2016 alone. Currently, its air conditioning unit holds 1,842 independent intellectual property rights, including 297 patents.

Li said they will continue to offer intelligent and customized air conditioners next year to meet consumption upgrading, with annual sales expected to reach 15 million units within three years.

With the advent of the 5G era, air conditioners will be incorporated into intelligent homes, rather than existing ones. The intelligent air conditioners should possess the functions of "self-learning, self-adaption, self-diagnosis and self-correction", according to TCL.

"Every 100 Chinese households in rural areas owns 43.8 units of air conditioners, while each (group of) 100 urban families has 124 units. In Japan, every 100 households owns 272 units of air conditioners, so China's air conditioner market still has a lot of room to grow," said Yang Jie, general manager of industry consultancy ChinaIOL, adding the rural and urban markets show different demand characteristics.

"You can see the consumption upgrading is the theme in cities, but there is a necessity to introduce more air conditioners to residents in rural areas," Yang added.

Statistics from industry watcher China Market Monitor showed China's sales of air conditioners reached 57.87 million units in 2016, up 27.4 percent year-on-year. Its revenue rose to 198.7 billion yuan, an increase of 32.4 percent compared with the same period last year, marking a record high. Meanwhile, the proportion of intelligent and high-end air conditioners is improving significantly.

However, industry insiders expressed concern about China's air conditioner market in 2018 due to tightened regulations in the real estate market and lack of incentives from the authority. Beijing consultancy All View Cloud, or AVC, estimates its sales will drop about 15 percent next year.

Lu Jianguo, deputy chief engineer of Chinese Home Appliances Research Institute, said apart from adjusting the indoor temperature and humidity, the upgraded air conditioners should tackle indoor air pollution and add functions that help in enhancing people's health, such as reducing noise and radiation.