(Yicai) June 26 -- Chinese home appliance makers, including Midea Group and TCL Technology Group, are starting to reap the benefits of local production and tailored product lines in Latin America, particularly Brazil, as their market shares increase and brand recognition grows.

Midea is investing in Brazil, South America’s largest market, because it is optimistic about the market’s growth potential, Tang Quan, its head of marketing for the Americas, told Yicai. The Foshan-based company expects annual revenue from Brazil to exceed CNY10 billion (USD1.4 billion) in coming years.

“The home appliance adoption rate here is still relatively low,” Tang pointed out. Chinese-branded electronics have a 20 percent market share in Brazil, up from 16.5 percent in 2019, according to global consumer intelligence firm NIQ.

Midea’s third factory in Brazil, built at a cost of more than CNY700 million (USD97.8 million), came on stream at the end of last year. Able to turn out over 1 million products annually, mainly refrigerators and washing machines, it was the largest single investment in Brazil’s home appliance sector in the past decade.

In addition, Midea-owned Welling Motor Manufacturing plans to open another plant in Brazil in the fourth quarter of this year to produce two million direct current motors for air conditioners a year. Midea is widely recognized as the world's largest maker of aircon products.

The company is also targeting the Peruvian market. Its local subsidiary there, established early last year, has already built sales channels for smart aircons, large-capacity fridges, and washing machines, and has developed new products suited to Peru's high temperatures and humidity.

TCL in Brazil

Huizhou-based TCL, a compatriot rival of Midea’s, has been operating in Brazil for nine years and ranks second for television sales.

Chen Lei, marketing director of TCL Industrial Latin America, said that TCL’s total revenue in the Latin American market is expected to reach CNY10 billion this year. The company’s TV business revenue alone may also hit CNY10 billion next year.

Since 2023, Chinese home appliance brands have accelerated their entry into Latin America, particularly Brazil, according to Chen. Economic and trade ties between the two countries continue to deepen, and more Chinese firms are exploring overseas opportunities, which is even evident in the growing number of Chinese restaurants in São Paulo, Chen added.

TCL's success underscores the importance of localized production. After investing in Brazil, the company dispatched Chinese engineers to help local workers improve their technical skills. Initially, the factory could only produce 32-inch TV sets, but it now manufactures 85-inch models.

TCL also brought an air conditioner factory online in 2022, which significantly boosted sales.

Premium Brands Strategy

Chen noted that investment by Chinese businesses in Brazil is no longer limited to original equipment manufacturing projects or “branding” work. They are now focused on building truly premium brands, he said.

To this end, TCL is now a global partner of the Olympic Games and sponsors cultural and sports events, such as Latin American art and home decor exhibitions, as well as film festivals.

Between 2021 and 2022, TCL sponsored Brazil’s national football team, the Copa América, and Brazilian surfers. This led to a surge in TCL-branded TV sales and helped the firm expand into other home appliance segments, including aircons. By sponsoring the Copa Libertadores, Copa América, and the Olympic Games since 2013, TCL has broken into the local mid-to-high-end market.

Despite these efforts, Chinese companies face stiff competition and several challenges in Latin America. Chen said Brazil is the most complex market in the region, citing high tariffs, complicated tax systems, and an unstable currency. “The challenge is achieving rapid business growth,” he said.

“Only by finding a reliable local partner can we quickly identify market opportunities,” Chen said, pointing to TCL’s joint venture with SEMP, a Brazilian consumer electronics company. The partnership combines TCL’s brand and technological strengths with SEMP’s local customer base, driving growth.

“It’s difficult to simply replicate a Chinese market strategy in Brazil,” Chen noted. “We must respect local laws, culture, and standards.” He added that TCL prioritizes hiring local talent for both manufacturing and marketing, with Chinese expatriates making up only about 1 percent of the JV's workforce.

Editors: Tang Shihua, Emmi Laine