(Yicai Global) Nov. 5 -- India is becoming a hot spot for Chinese electrical appliance makers. Dongguan-based Midea Group will invest INR13.5 billion (USD186 million) to build a technology park in the South Asian nation. The company held a groundbreaking ceremony for the facility in Supa Parner, Maharashtra, India, on Nov. 3.
Covering 270,000 square meters, the complex will go into operation in early 2020 when it will create around 2,000 jobs for locals. It will consist of three major plants. The company plans to build it into a production base for home appliances, heating, ventilation and air conditioning units and compressors in the next five years.
The park will achieve an annual output of 500,000 units of refrigerators, washing machines, water purifiers and water heaters, 1.5 million units of household air conditioners, 250,000 units of commercial air conditioners and 4.5 million units of air conditioning compressors, Yicai Global has learned.
India is an important strategic market for the company. It began the 'Greenland' project in India -- which will expand its Indian industrial positioning in home appliances -- last year, the company said. It will also set up a research center in the country in future to assume design, testing and product development for the local market.
India's home appliance market size will reach INR700 billion (USD9.7 billion), the company said. The market size in terms of product quantities will be 6 million air conditioners, 13 million refrigerators, 7 million water purifiers, and 4 million water heaters, it added. The industry's annual average compound growth rate in India will reach between 6 percent and 7 percent, the company said.
Qingdao-based Haier Group has also expanded its investment in the country. The company has walked a path from brand export to building factories and industrial parks since entering India in 2004. The company's industrial park in Pune, India began production last year when Haier's income in India rose 40 percent.
Guangdong-based TCL has also upped its investment in India because of the country's good prospects. The company and its unit Leynew Technology have all pushed forward their expansion in India's smart television business. TCL gained growth of 120 percent in color TV sales in the first half in India. This is just a beginning, said Li Dongsheng, the director of the company. TCL is planning its own factories in India, Li added.
India has a population of about 1.3 billion with almost the same gross domestic product growth rate as that of China, but one fourth of China's GDP per capita, so the market potential is huge, Zhou Nan, the general secretary of the Home Appliance Sub Chamber of China Chamber of Commerce for Import and Export of Machinery and Electronic Products, told Yicai Global.
India adopts a federal system, so the varied laws and regulations of different states, and inconsistent language and logistics present a challenge, Zhou said. The country's increase in mobile phone import tariffs last year has also generated a great impact, Zhou advised.
Expansion into the Indian market should not be blindly optimistic, and difficulties should not be underestimated, he cautioned.
Editor: Ben Armour