Midea ups global play with R&D centers

Chinese home appliance maker Midea Group will increase investment in localized research and development, and expand its footprint in Southeast Asia, Latin America and the Middle East.

The move is part of Midea's strategy to grow new sources of revenue and make its brand influential abroad.

"Our R&D center in North America was set up in 2018. It not only includes technological R&D but involves patent layout, industrial standards and related certification, after-sales services and training. Currently, the number of R&D staff members at the center has increased to more than 30," said Zhou Zhiwen, general manager of overseas sales at Midea's household air conditioner business unit.

Midea started as an OEM or original equipment manufacturer at the early stage in North America, but determined to develop company-owned brands in an attempt to enhance its core competitiveness globally. Currently, Midea's household air conditioners command a 60 percent market share in North America.

Zhou said Midea will place an emphasis on building company-owned brands, and step up its localization efforts, including recruitment of local employees and innovating on product design based on local consumer demand and preferences.

At present, Midea has 35 R&D centers around the world. Zhou said these centers will enhance Midea's R&D capacity and promote the upgrade and iteration of products in Southeast Asia, and the company will carry out research and exploration on the heat pump technology and energy management solutions in Europe.

Midea will also step up R&D inputs in Brazil to meet demand from Latin America, while its R&D center in Japan will concentrate on the development of cutting-edge technologies, and launch innovative products that target the local market, Zhou said.

Japan, he said, has been taking the lead in advanced technologies related to the heating ventilation air-conditioning industry.

The Southeast Asian market will be a focal point in Midea's globalization push. The company's plant in Thailand, which is its largest manufacturing base in Southeast Asia, started operations in October 2022. With a total investment of more than 1.1 billion yuan ($152.9 million), the annual output of the factory has exceeded 1 million units, and the figure will likely surpass 4 million units in 2025, he said.

The first air conditioner from Midea's Indonesian factory is expected to roll off the production line in the second quarter of this year, while it will explore the possibility of establishing production bases in Saudi Arabia and Mexico.

"In the past, most Chinese enterprises adopted the OEM model, but nowadays they tend to build their own brands to participate in global competition," said Liang Zhenpeng, an independent consumer electronics analyst.

Liang also said that establishing overseas branches or production bases not only brings China's advanced manufacturing, R&D and management capabilities to overseas markets, but also creates job opportunities for locals and enhances the competitiveness of Chinese enterprises on the global stage.

Sales of China's home appliance sector reached 793 billion yuan in 2023, up 3 percent year-on-year, according to Beijing-based market consultancy All View Cloud, which specializes in home appliances.

"It is inevitable that Chinese home appliance manufacturers are expanding their footprint overseas for new profit growth points and long-term development, as the domestic home appliance market is almost saturated," said Zhao Meimei, assistant president of Beijing-based market consultancy AVC.

Establishing R&D centers outside China will help Chinese enterprises gain innovation advantages, master new technologies and grow a greater voice in the fiercely competitive global markets, she said.

fanfeifei@chinadaily.com.cn