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Galanz Takes Action in Air-conditioning Sector and A Tentative Appearance of Changes in 2009’s Air-conditioning Industry 2008.08.02 Source: back

Along with the cooler summer due to continuous rainfall, the price-rise of raw materials causing the increase in manufacturing cost and the trend of next year which will greatly enhance the threshold for energy efficiency have meant as “three big mountains" pressing the air-conditioning enterprises. The situation of internal and external problems for sales of air conditioning has exacerbated the industry to reshuffle the "catalyst" and, in a sudden, the argument about the major industrial change has then become rampant.

Changes under the Pressure of High-volume Inventory

Related data has shown that, due to an oversupply of this year, the 1st quarter's domestic air conditioning industry has its inventory reaching 11.298 million units, an increase of 4.7% year on year, hitting a new high in recent years. Meanwhile, the new standard energy-efficient threshold for frequency-fixed air-conditioning would mean that all the unsold more air conditioners of more than 22 million units stored by enterprises shall become "substandard goods" in the year of 2009 that will be banned on public sales. In addition, many regions of China have suffered from rainy weather or continuous heavy rain or even rainstorms, leading the enthusiasm of consumers failing to buy air-conditioning and weak in domestic market growth. Facing a highly competitive market situation, three famous brands of "Haier", "Media" and "Geli", who have owned the advantages of their inventory, have encountered an unprecedented pressure. If they can not effectively turn their inventory into a circulation or mitigation, such inventory could, at any time, become an enterprise' market crisis just like the "Dammed Lake" on the head.

"Weak domestic Sales, declined export and coupled with the pressure brought by energy efficiency upgrades, the ‘energy-efficient door’ has become the ‘catalys’' to accelerate the changes of situation of domestic air-conditioning", Lu Haijun, Galanz's deputy general manager of air-conditioning said so and expressed that "such substantial energy-efficiency upgrades are both opportunities and challenges for each air-conditioning business company. For Galanz, it means much more as major opportunities than challenges, opportunities are the mainstream".

Lu Haijun believes that the adjustment brought by the "energy-efficient door" would play the role of re-delineate the starting line. The new energy efficiency standard will enable all brands into "zero" in the year of 2009 and all the relative brands will start, relatively speaking, from the same starting line, a very rare opportunity for Galanz which has been hovering outside the famous "old three". Starting from the air-conditioned arena next year, the current mainstream brands may have accumulation from their previous market and be the leader running 500 meters ahead, but they need to pay attention to other brands going into with a light pack. At the same time, the old famous three have also carried a burden of massive pressure of the huge inventory produced by their huge production capacity. Therefore, the year of 2009 is the perfect opportunity for brands, such as Galanz, to fill gaps and to catch up with the mainstream team.

The Way towards Nirvana Starts from One's Self-accomplishment

"Transformation" can be deemed as the long-term unchangeable theme for Galanz's air-conditioning. Due to this section of bumpy road, perhaps Galanz has the more certain right to talk about how and what to change for the second-line camp. Lu Haijun said that the old saying of "Sharp tools make good work." provides Galanz great inspiration. Galanz has not been lack of weapons for the competition in air-conditioning field. Speaking of the brands of the non-mainstream camp in the upcoming new frozen years, only the entire accomplishments of the system of products, system of prices, ratio of performance/price of products, and quality distribution channels and outlets and other sharp weapons can be the start for the way towards Nirvana.

Galanz air-conditioning has developed for seven years by which four aspects of the advantages have been accumulated as its weapons in the future:

I. Advantages of Manufacturing Scale: Galanz air conditioning production base has been put into production that has the same capacity as that of the field earlier. This year, the overall 5 million sets of which the scale of export would be far larger than the domestic scale, i.e., much greater that the industrial practice of 4:1.

II. Advantages of Technologies: Galanz ultra-quiet air-conditioning reaches 22 decibels technologically and other brands are 23 and 24 decibels. This is a core advantage of Galanz.

III. Advantages of ratio of performance/price of products: Improving the ratio of performance/price as well as product competitiveness is also the “Tianji's Horse Racing Strategy”. The=at’s to say, when you are involved in high-end, you can turn to hit the middle-end, then the ratio of performance/price of products can be used to enhance the sales of both the high-end and middle-end units as well as to strengthen the cheap but quality advantage about the ratio of performance/price impressed in the minds of consumers. Tha is a strategy of "Value War".

IV. Advantages of Promotion: Forming a close relationship of partnership with different local distributors, the marketing rule of "the delivery of goods means the sales of goods" should be adhered to. Sharing the commitment to the promotion channels and the risks and the tasks of the channels for the distribution, various places have to hold activities such as a high van and other forms to maintain a closer relationship with manufacturers.

It is inevitable that any change would bring some pains from channels, which is an obstacle that also affects the moving forward and inevitable to demand a solid foundation for the market. The tension, the depth and the breadth of channels need further strengthen while the market, the customers and the products need precision farming. All of these operations need a more solid foundation depending on which Galanz could then make better use of its advantages.

Price War Appear in Market Again

Price war has once resulted microwave-ovens the success of leadership position in the field. Lu Haijun, the deputy general manager of Galanz air-conditioning, disclosed that Galanz's frozen year of 2009 would continue to implement and improve the essence of its price war and 2009's price gradient of products shall be designed and planned to have a re-arrangement in accordance with the “Tianji's Horse Racing Strategy”. When a price war is carried out as a strategy, this is not simply the price war, but becoming a "value war". When the market demands for more diversified supplies today, a "special price unit" can only meet temporary relief and the vigorous promotion of products can then be highly competitive long-term plan. As Galanz has introduced the high-end -- a pricing strategy of promotion turmoil for light-wave and ultra-quiet air-conditioning, it has hitted both the market and artistry-oriented nature, the harmonic win-win mode of strategy for manufacturers, merchants and consumers after all.

When high-end products have their prices cut to that price of the middle-end, related background support would be ratio of performance/price which is easier to create a promotion turmoil compared to strategies of those brands using low-price and special price to attract inbound channels for related products or to attract attention. Because the positioning of high-end air-conditioning, low-end production is held in much a smaller scale since the annual sales are mainly involved in middle-end products. Therefore, Galanz has its high-end products with prices cut to that of the middle-end to react, in a react promotion, others' special price, the pure price war has been improved into an extent of a value war based on the ratio of performance/price. From the above said conditions, it is not difficult to understand why Galanz air-conditioning would appear in peak air-conditioning season with price cuts instead.

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