Daikin grows home and abroad

Corporate July 22, 2016 01:00


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OSAKA-BASED Daikin Industries is investing Bt15 billion to build a room air-conditioner factory in Vietnam and further expand air-compressor production at its Rayong plant to meet growing demand at home and abroad.

Hitoshi Tanaka, president of Siam Daikin Sales, said yesterday that his parent company Daikin Industries recently revealed the Bt10-billion plan to increase production capacity in anticipation of the rapidly growing demand in Vietnam.

The new plant in the capital Hanoi is expected to be opened in 2018, starting with annual production capacity of 700,000 units before ramping up to one million units by 2020.

“Vietnam is the fastest growing market for Daikin. Therefore, we need to have the new factory to help the Thai factory, which is now at full capacity,” he said.

Daikin’s Sri Racha factory still remains the biggest manufacturing centre outside Japan and mainly produces A/Cs and compressors for domestic and overseas markets in Asia and Oceania, Japan, Europe and India.

The remaining Bt5 billion would be used to increase annual air-compressor production at the Sri Racha factory to 3.5 million units by next year.

Siam Daikin Sales is focusing more on expanding its distribution channels upcountry.

This month, the company opened three branches in the tourism cities of Chiang Mai, Phuket and Khon Kaen.

“After the opening of new branches, we are planning to add seven more branches by next year in various locations across the country – Nakhon Sawan, Ubon Ratchathani, Nakhon Ratchasima, Ratchaburi, Rayong, Hat Yai and Surat Thani,” he said.

Like its head office in Bangkok, the new branches will provide quick after-sales services, stock sufficient parts, include a mini showroom to display a range of products and run a training centre.

Bt100m on new branches

The company earmarks about Bt100 million for this branch expansion within two years. It has also prepared Bt400 million for marketing activities and brand-building.

Somporn Jangreenapawong, assistant managing director, pointed out that there was more room to grow in the A/C market, as penetration was only 24 per cent of households.

Penetration in Greater Bangkok was more than 50 per cent, so the market was facing limited growth.

However, growth potential appears high in other regions.

For example, the ownership rate of A/Cs in the Central region was about 30 per cent while the rates in the North, Northeast and South are still under the country’s average.

Daikin targets raising sales 22 per cent to Bt11 billion this year from Bt9 billion last year.

Greater Bangkok will remain the biggest contributor at Bt7.42 billion, up 10 per cent.

The Central region is second at Bt540 million, up 100 per cent, followed by the North at Bt740 million, up 72 per cent, and the South at Bt440 million, up 69 per cent.

By 2020, sales from provincial markets are expected to reach 73 per cent, leaving Greater Bangkok with 27 per cent. Under that strategy, the company aims to double sales from this fiscal year, which started in April.

The overall market for room A/Cs is about Bt30 billion and growing an average 7 per cent per year.

Due to the higher temperatures from January-April, the market accelerated 40 per cent while Daikin’s A/Cs sales outpaced the market, soaring 60 per cent.

Within four years, the company targets to sell at least 500,000 room A/Cs, up from 360,000.

During the same period, the market for inverter A/Cs soared 70 per cent while Daikin’s inverter A/Cs anticipated a 80-per-cent surge.

With this innovative flagship product, the company became the market leader with a share of over 30 per cent.