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AC prices expected to rise as China gets “smart”

CHINA: Prices of residential air conditioners in China are set to rise, according to the latest report from UK market intelligence company BSRIA.

Although considered cheap by European standards, basic average prices of residential air conditioners in China are on an upward trend, the report says. The current average price of residential air conditioners – mainly single splits with capacity below 5kW – is close to RMB3,000 (€385.00). BSRIA sees this price rising to as much as RMB3,500 (€445.00) in the next few years.

The increases are said to be more to do with a significant shift in consumer demand for high-end, more energy efficient, and consequently more expensive products, rather than mere price increases.

The air conditioner manufacturers are said to be eager to reduce the level of price competition and increase margins through product and technology upgrading, by introducing interaction with mobile internet, IOT, cloud computing, AI technology and other technologies. While it has taken a few years for the market for smart air conditioners to take off, BSRIA sees smart air conditioners benefiting from a rapid growth in the smart appliances and smart homes market, which is expected to see a CAGR growth of some 30% between 2018-2030.

According to published data, the proportion of inverter type residential air conditioning exceeded 50% in the first half of 2019. The proportions of smart residential air conditioning units exceeded 30%, with the market for these medium and high-end models continuing to increase their share.

While the cost of raw materials is an important influence, recent fluctuations in market prices makes it difficult to predict what effect these may have on finished product prices. As an example, global copper prices experienced a large fluctuation in the first half of this year. In January and February, copper prices rose rapidly due to low inventory levels and positive news regarding the China-US trade war. However, by May/June, copper prices declined sharply as tensions of the trade war worsened, global investors worried that the dispute would weaken demand on cooper and therefore pushed copper prices down. BSRIA expects that the future the price of raw materials will still be affected by many uncertain factors such as global economic environment, market supply and demand as well as inventory levels.


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