(Yicai) Oct. 16 -- Leading Chinese home appliance firms, including Haier Smart Home and Midea Group, are increasing investment in their overseas factories in countries such as Egypt and Thailand, saying tariff fluctuations have not changed their long-term localization plans.

Regardless of tariff changes, only a long-term global presence can give a company the confidence to minimize risks, Hu Tianshuai, head of international public relations and communications at Midea, told Yicai at the 140th China Import and Export Fair, better known as the Canton Fair, in China’s southern Guangzhou yesterday.

Midea has just set up an oven factory in Egypt, its seventh in the country, and the Egyptian base as a whole can meet demand from Africa and the Middle East, Hu noted, adding that the firm has also expanded its research and development center in the US, is developing a factory in Mexico, and has set up plants in Vietnam and Thailand.

Haier will break ground at a washing machine factory in Thailand on Oct. 26, and the second phase of its refrigerator and freezer plant at its industrial park in Egypt will open in mid-to-late November, Yicai learned from the company staff at the Canton Fair.

Haier will add factories and expand capacity in South Asia and rebuild its integrated research, manufacturing, and sales network in South America, Brazil, and Algeria, Zhang Qingfu, vice president of the firm’s overseas home appliance subsidiary, told Yicai at the Canton Fair.

Vanward New Electric’s production base in Thailand can serve Southeast Asia, Europe, and the United States, while the one in Egypt can cover Africa, the Middle East, and also Europe, Yang Songwen, VP of the Chinese water heater and kitchen appliance maker, told Yicai at the Canton Fair. He attended the groundbreaking ceremony for the second phase of Vanward’s Egyptian base on earlier this month.

Once the second phase of its Egyptian base is completed, Vanward will have a local annual output capacity of two million sets of gas water heater components and 500,000 finished units. Meanwhile, its Thai base already has an annual capacity of three million kitchen appliances, outdoor grills, and other products.

Setting up production bases overseas helps Chinese companies avoid trade barriers, reduces the impact of tariffs, and shortens delivery times, Yang noted. Easing tariffs between China and the US will improve the business environment, but it will not affect Vanward's global expansion because localization is true globalization, and only win-win cooperation with local industrial chains can bring long-term growth, he added.

The overseas sales head at a Chinese cleaning appliance maker told Yicai at the Canton Fair that it already has factories in Vietnam and Thailand and has moved production of some US-bound products there. Frequent changes in US tariff policy are a major challenge, so the company hopes tariffs will remain stable, the head pointed out.

Deepening Localization

Demand in Thailand is completely different from that in China, Yang said. Gas water heaters and storage-type electric water heaters dominate in China, but in Thailand, people use instant water heaters, he explained.

Vanward's Egyptian project is wholly owned and not only serves the local market but also the Middle East and Europe. It supplies components such as heat exchangers, burners, and valve bodies to local and international brands. The company has teamed up with dozens of supply chain partners in Thailand and more than 10 in Egypt.

The supply chains and talent teams at Vanward’s overseas production bases are becoming increasingly localized, as its headquarters mainly provides strategy and compliance requirements, Yang noted.

Companies should not put all their eggs in one basket, Hu said. Even if some regional markets fluctuate, others still offer opportunities, she pointed out, adding that Midea's business in Asia-Pacific and Latin America is growing quickly, and its expansion will follow local demand.

Editor: Futura Costaglione