Appliance maker Midea spreads regional footprint

Going overseas brings Chinese enterprises closer to Southeast Asia, further deepening understanding between the people, according to Jiang Xuan, regional head of the Midea Group.

"We positioned Thailand as our biggest overseas hub for manufacturing, sales, and distribution," said Jiang Xuan, Asia-Pacific regional president of the Chinese home appliance giant.

"Through enhancing our operations in Thailand, we are moving forward to the three-year strategic goal of becoming a leader in the home appliances industry in the Asia-Pacific region," he added.

One of the first Chinese brands to relocate its industrial chains to Southeast Asia, Midea saw its market share of household air conditioners in Malaysia rank first last year.

In Thailand, its market share of microwave ovens and refrigerators took the top spot, while in Vietnam the Chinese company was in second place.

Midea operates seven manufacturing plants in Thailand, producing a wide range of products, including home air conditioners, refrigerators, laundry white goods, and other home appliances.

Midea has an Asia-Pacific regional office in Singapore, as well as an office in Thailand that helps support its overall operations in Southeast Asia.

"With a stable political environment and favorable business policies, Thailand will play a key role as a regional manufacturing hub and attract more long-term investment," Jiang said.

Cooperation between China and Southeast Asia has mutual benefits, he said. While Chinese enterprises expand their business reach in the region, Southeast Asia countries see a boost in employment.

The Midea Group has around 10,000 employees in Thailand, and Jiang said almost 97 percent of them are locals.

"Moreover, China's most advanced technologies and manufacturing experiences have helped boost local production. For some countries with their own development goal of going green, Chinese innovation is also a crucial contributor," he said.

The group's new regional distribution center started operations in Bangkok last year.

The facility has 1,000 square meters of storage space, and its operations have shortened the average delivery time across Southeast Asia from 60 to 45 days.

Since the establishment of Midea's first factory in Thailand, challenges and difficulties such as cultural differences had to be overcome, Jiang said.

"Despite the blood ties and historical friendship with the Chinese, Thai people have their own characteristics," Jiang said. "For example, they prefer doing things at a slower pace than us. They also prefer to follow strict and detailed instructions."

To boost mutual understanding and trust, he said the company has organized regular training and study tours for Thai employees and invited them to visit the group's factories in China.

"We also showed full respect to local culture by planning celebrations for Thai festivals such as Songkran (the Thai New Year)," Jiang said.

"In our canteens, we serve both Thai and Chinese cuisine to introduce Chinese food to our employees while making them feel at home," he added.

Apart from bridging cultural differences, the group has also overcome the varying demand for products in different Southeast Asian markets.

For instance, Jiang said, smart home appliances are more popular in Vietnam than in Thailand.

"Thai people are keen to choose twin-tub washing machines instead of the single-tub ones that are now mostly used by Chinese," he explained.

Jiang sees these differences in market demand as business opportunities. Chinese brands already have vast experience in traditional product manufacturing techniques that some regions may prefer, he said.

Southeast Asia also has great potential markets for some home appliances, such as air conditioners.

According to the Household Energy Survey Report of the Statistics Department of Thailand, the penetration rate of air conditioners in Thai households was 37.5 percent in 2022.

Another report released by the International Institute of Refrigeration in 2019 showed that air conditioner ownership in Vietnam, Cambodia, and Indonesia was lower than 10 percent.

Midea now not only produces air conditioners for homes, Jiang said, but also cooling systems for buildings. In the near future, the group may also explore the Thai elevator market.

"As our production volume grows, we've cultivated a lot of small and middle-sized local enterprises, helped to enhance local supply chains, and benefited logistics as well as storage companies," Jiang said.

"All these will then contribute to the kingdom's overall competitiveness in the industry."

The group's Thai-manufactured products are also sold in Europe and the United States.

"This allows the local supply chain to learn more about the market outside of Thailand as well as the demand from non-ASEAN regions, which will lay the basis for the kingdom's future economic growth," he added.

Fan Feifei in Beijing contributed to this story.