Kanyong Electric sees slump in demand

Growth in local demand for electrical home appliances is expected to decline significantly this year, resulting in a less than a 1-per-cent increase in sales.

To stay in line with both slowing growth in demand and the downturn in the property sector, Mitsubishi Electric Kang Yong Watana, the local sales and marketing arm for Mitsubishi Electric home appliances, has set a sales-growth target of 3 per cent to Bt7.6 billion for its fiscal 2009.

The company's fiscal 2009 will run from April 1 to March 31, 2010.

Mitsubishi Electric Kang Yong Watana proclaims itself to be the leader in both air-conditioners and refrigerators, with market shares of 29 per cent and 23 per cent, respectively.

The company expects to achieve sales of Bt7.4 billion in fiscal 2008 ending this March 31, up 4.23 per cent from Bt7.1 billion in fiscal 2007.

"We expect overall market growth to decline significantly this year. In these difficult times, consumers have less purchasing power. Many companies selling electrical home appliances have slashed their prices to gain more customers, thus causing the total sales value of electrical goods to decline even more," said Anun Bunjerdtum, director and general manager for marketing and sales.

He said his company predicted the overall market for electrical home appliances would grow 5 per cent in volume, or unit sales, this year but less than 1 per cent in sales value.

That projection is much lower than during previous, more normal economic circumstances, when home appliances enjoyed sales growth of more than 10 per cent.

"We've been seeing signs of a downturn since last October, when our growth slowed to only 3-5 per cent," said Anun.

However, Anun said Mitsubishi had been less affected by the present economic turmoil than has other players in the market.

"We've applied a strategy we call 'Select and Focus' to counter the economic difficulty. Under this, we select core products that we're quite strong in, such as air-conditioners, refrigerators, ventilators, electric fans and water pumps, and focus on those," he said.

Anun said Mitsubishi Electric Kang Yong Watana would allocate its advertising and marketing budgets more cautiously this year. The funds will be better targeted and used more efficiently.

The company has earmarked Bt600 million for advertising and marketing expenditures this year.

Anun said overall demand for air-conditioners in Thailand was expected to increase only 4 per cent this year to 740,000 units, while that for refrigerators would increase only 2 per cent to 1.32 million units.

He said demand for electric fans would increase only 2 per cent to 3 million units.

"Due to the downturn in the local property sector, demand for ventilators is expected to be stagnant this year, about 420,000 units. Growth in demand for water pumps will decline from 6-7 per cent previously to only 3 per cent, or about 320,000 units," said Anun.