Vietnam a really cool market for air-conditioner makers

Most major air-conditioner makers are making themselves at home in Vietnam as demand surges alongside economic growth and improving living conditions.

Vietnam’s market for the cooling systems was ranked Asia’s eighth largest in 2011, excluding Japan and China, with about 660,000 units sold.

But the country surpassed Thailand in 2015 and sales soared to 1.98 million units in 2016, lifting it to third place behind India and Indonesia.

Citing the Japan Refrigeration and Air Conditioning Industry Association, the report said global market grew 2.5 percent between 2011 and 2016, but surged 34.3 percent in Asia during that period, with Vietnamese sales tripling to 150 billion yen, or $1.35 billion.

Vietnam’s local media reports said Daikin’s revenue surged 17 times in the past 10 years to more than VND10 trillion ($438.6 million) in 2017.

The brand also set a record of earning more than 2 trillion yen ($18.3 billion) in five consecutive years between 2013 and 2018.

In May, it opened its first factory in Vietnam in Hung Yen Province, not far from Hanoi, aiming to produce one million air conditioners per year by 2020.

Rising wealth has fueled growth of the air conditioner market in Vietnam, Nikkei said.Vietnam’s gross domestic product (GDP) grew by 6.8 percent last year, the highest since 2007 before the economy broke another record in the first quarter of 2018 when it expanded by 7.38 percent, marking the highest growth rate in a decade.

Vietnam’s per-capita GDP totaled about $2,300 in 2017, but topped $4,000 in Ho Chi Minh City and reached the upper $3,000 range in Hanoi, the country’s two biggest cities.

Japan’s Daikin and Panasonic each control about 25 percent of Vietnam’s air conditioner market, followed by LG, Samsung Electronics of South Korea and Sweden’s Electrolux.

In March, LG Electronics announced it would invest $1.5 billion to expand production of air-conditioners. Meanwhile, Panasonic is increasing output at its Malaysian factory to expand supply to Vietnam.

With a population of more than 90 million, Vietnam is seen as a promising air conditioner market, with just 17 percent of Vietnamese households owning an air conditioner as of last year, according to British research firm Euromonitor International.