This air conditioning factory aims to be the "Foxconn" of the air conditioning industry.

Su Jin, Aiken Home Appliances Network

With the arrival of Minor Heat, the hottest season of the year is here, and the air conditioning market is also gaining strong momentum. Amidst favorable market conditions, effectively strategizing the layout tests a brand's determination and vision more than ever.

Amidst the Wave of Capacity Expansion
Yingliang Base Construction Steadily Advances

In fact, since last year's peak season, the explosive growth of the air conditioning market has presented manufacturers with more abundant opportunities compared to the past. Entering 2023, the open environment has fostered a more positive and optimistic attitude among manufacturers, leading to higher expectations for scale growth this year.

Indeed, the first half of this year saw robust production and sales for air conditioners. According to industry online statistics, domestic air conditioner production for domestic sales in April and May increased year-on-year by 29.7% and 29.1% respectively. Looking at scheduled production data, planned domestic sales for June and July saw year-on-year increases of 23.8% and 24.7% respectively.

A wave of capacity expansion is surging again among Chinese air conditioner manufacturers, with one manufacturing facility after another springing up. This includes new bases being put into operation by mainstream brands, as well as new entrants joining the air conditioning industry, injecting fresh vitality.

The Xuzhou Yingliang Smart Air Conditioning Industrial Park is located in the western suburbs of Suining County, invested and built by Chongqing Yingliang Industrial Co., Ltd. Currently, the construction of this base project is entering its final sprint phase. Yingliang chose Xuzhou for specific reasons. Xuzhou is a major city in northern Jiangsu, historically known as a major transportation hub connecting five provinces. A Yingliang representative stated: "There are no large-scale air conditioning factories in North China yet. By locating here, Xuzhou Yingliang aims to radiate its influence to Jiangsu, Anhui, Hebei, Shandong, Henan, Zhejiang, Northeast China, and other areas."

In terms of factory positioning, Yingliang aims to build a smart home appliance manufacturing industrial park focused on complete air conditioning units and supplemented by other smart home appliances. It will integrate R&D, complete unit production, component production, sales, and after-sales service, forming a relatively comprehensive smart home appliance industry chain. The representative stated: "We started technical R&D last year. Construction began early this year, planning for 5 complete unit production lines and seven major workshops including injection molding, sheet metal, painting, heat exchangers, and piping components. Workshop No. 1 is now complete, equipment has been installed and commissioned; Workshop No. 2 is under intense construction and is expected to be completed and handed over by the end of August. The entire factory will officially commence production before the end of September. Phase one capacity will reach 1.5 million units. After later technical upgrades, capacity is expected to reach 3 million units."

While the base construction progresses methodically, the air conditioning industry is releasing strong signals of recovery. The Yingliang representative is contemplating the brand's development path.

Focusing on the OEM Field
Seeking Appropriate Scale

 "Building an independent brand is very difficult. The investment of manpower, material, and financial resources yields a return that's hard to balance in the short term. Therefore, we currently will not promote an independent brand to end-users. The Yingliang base should reference Foxconn and excel in every aspect within the OEM field," the representative positioned Yingliang as a professional, high-quality air conditioner OEM factory.

Industry sentiment has been ignited this year, especially amid the influx of new brands. The competition among third- and fourth-tier brands for agents and dealer outlets is particularly fierce. They achieve leapfrog increases in production and sales scale through proactive, even aggressive, pricing strategies. However, the awkward reality is that brands relying primarily on low prices to seize market share struggle to gain sustainable development momentum. Fleeting prosperity cannot substitute for long-term, high-quality growth.

Simultaneously, in today's era of consumption upgrades, users demand higher product quality, functionality, and experience. Brand recognition is concentrated. Enterprises must break away from the trap of low pricing, build robust product competitiveness, and establish their brand image through long-term brand operations and promotion.

Therefore, Yingliang's brand development approach, while somewhat unexpected, is also logical. It avoids the fiercely competitive channel and retail ends, focusing instead on developing OEM clients and establishing advantages in manufacturing through quality.

The Yingliang representative stated: "Professionals do professional work. We must clearly recognize that trying to cooperate with brands of certain repute while simultaneously entering the low-end market with our own brand inevitably leads to divided focus. Once we enter the market with our own brand, the marketing end becomes our weakness and consumes excessive energy. Furthermore, we lack brand pull in channels and with end-users, inevitably trapping us in low prices. Yingliang's advantage lies in R&D and manufacturing. We aim to compete for the OEM business of brands that demand quality and achieve a certain scale." Yingliang has thoroughly considered its strengths and the competitive environment, striving wholeheartedly to build a high-quality air conditioner production base targeting the OEM business.

The representative emphasized: "By providing brand customers with high-quality products, they can forge ahead. Only if they do well, will we do well."

The heated production situation on the supply side cannot mask the harsh reality of stock competition in the air conditioning industry. The peak season's boom also cannot replace the uncertainty brought by the slower-than-expected recovery of consumer confidence regarding the future market. Knowing what to pursue and what to relinquish, Yingliang Air Conditioning has chosen a development path suited to itself.