World's Biggest Aircon Maker Gree Sparks China Price War
Wang Zhen
DATE:  Nov 30 2019
/ SOURCE:  yicai
World's Biggest Aircon Maker Gree Sparks China Price War World's Biggest Aircon Maker Gree Sparks China Price War

(Yicai Global) Nov. 29 -- Gree Electric Appliances, the world's largest maker of household air-conditioners, has thrown down the gauntlet to competitors by slashing prices as domestic demand for air-conditioning units has hit a glass ceiling.

Since Nov. 27, Zhuhai-based Gree has been offering the same discounted prices that it gave during the recent Chinese equivalent of Black Friday, the so-called Double 11 shopping bonanza. There is no time-limit for the discounts and they are available on online and in stores. Its inverter and fixed frequency aircons are now available for as little as CNY1,599 (USD227) and CNY1,399 respectively.

This has triggered a domino effect in the industry. Midea Group has undercut Gree with a starting price of CNY1,299 for its fixed frequency aircons. Other household names such as Skyworth Group and Changhong Electric plan to follow suit. But Ningbo Aux Air Conditioner can only drop prices as far as CNY1,599 for the same type of machine. It is no match for Gree in terms of scale and overheads, a senior employee told Yicai Global.

Faced with a saturated market, Gree is making the move to acquire market share and force out some small brands and copycats, said Gan Jianguo, vice president of Skyworth's air conditioner division. 

The move will also help trim Gree's inventory and improve its year-end performance, said Wang Yongtao, deputy director of the white goods research unit at Shenzhen All View Cloud Data Technology. Stock is estimated at about 30 million units.

Gree's aircon sales account for 80 percent of its total revenue, which is expected to remain at CNY200 billion (USD28.4 billion) or gain a little this year, Chief Executive Huang Hui told shareholders last week.

The price war is painful but necessary, according to Yang Jun, general manager of Sichuan Changhong Air Conditioner. In the short term, it will put greater pressure on the sector, intensify competition and secure future consumer demand. In the long run, it will benefit the development of the entire industry, he said.

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Keywords:   Gree Electric Appliances,Air-Conditioners