Cool but hot stuff in the market

Cool but hot stuff in the market

Hendarsyah Tarmizi, The Jakarta Post, Jakarta

The rapid expansion of the Indonesian air conditioner market
has been very encouraging over the last several years thanks to
the sharp increase in demand from home owners.

If in the past, air conditioners could be found only in big
houses, expensive apartments or big offices, now they can be seen
even in ordinary homes.

For the middle class, air conditioners have become must-have
item, just like a TV set, refrigerator or washing machine.

"Even ordinary houses are equipped with an air conditioner. It
has become a secondary item for many people," Achadiat Sudarmadi,
the manager of the Commercial AC division of PT LG Indonesia,
said.

The demand for air conditioners from home owners began to
surge three years ago when cheaper Chinese brands started to
flood the Indonesian market.

The Chinese brands, which are sold much more cheaper compared
to the established brands, have successfully helped promote the
popularity of air conditioners among Indonesian consumers.

"With their relatively cheaper prices, the Chinese brands have
lured many buyers, spreading the concept of a comfortable living
in society," Achadiat said.

At first, the entry of the Chinese brands hurt sales of the
more established brands, he admitted. "But later, their presence
has made a positive contribution to the country's air conditioner
market, creating a new demand both at the low end and in the up-
scale markets," he added.

The entry of Chinese air conditioners had resulted in tight
competition, forcing the manufacturers of the popular brands to
cut their prices in order to remain competitive.

At present, a standard split air conditioner, the most popular
type in the country, sells for between Rp 1.6 million to Rp 2
million each, much lower than the Rp 2 million to Rp 2.5 million
three years ago.

Not surprisingly, price decreases have led to increases in
demand. Annual sales of air conditioners in Indonesia rose more
than 30 percent over the past three consecutive years as a
result.

According Achadiat the Indonesian air conditioner market is
still in its infancy and is far from being saturated. "It is just
the beginning. The air conditioner market will continue to expand
in line with the improvement of people's purchasing power," he
added.

LG Indonesia estimates that total sales of air conditioners in
Indonesia will expand by at least 30 percent this year to between
550,000 and 600,000 units.

The Korean electronics giant, which sells a wide range of
electronics products such as TVs, washing machines and
refrigerators, expects a 35 percent increase in its air
conditioners sales to between 150,000 and 200,000 units this
year.

"Our market share reached 18 percent as of October last year.
We hope our market share will continue to expand, given the
continued increase in the demand for our products" he said.

The fast growth in sales has turned Indonesia into one of the
most promising air conditioner markets in the world, luring the
world's major manufacturers to sell their products here.

Established and popular names such as LG, Panasonic, Sharp,
Samsung, Fujitsu, Daikin, TC, General, Toshiba, Daimitsu, and
Gree can easily be found in electronics stores or supermarkets in
the country's major cities.

The competition is getting fiercer. This might be the reason
why major air conditioner manufacturers not only promise a good
quality compressor but also the comfort and convenience to win
the hearts of their buyers.

Most of the latest air conditioners offer sleek designs with
energy saving technology, in addition to their environmentally
friendly and health-related features.

The latest technology can not only reduce electricity
consumption but also protect people from the effects of air
pollution and kill hazardous bacteria.

LG, for instance, uses its Multi Power System and Multi V Plus
in their latest air conditioner models to reduce the energy
consumption.

LG is also introducing a new trend with never-thought-before
design elements and style concepts.

LG's award winning Artcool air conditioners are a great
example of such a trend. Whereas air conditioners have
traditionally been big and ugly and needed to be hidden somewhere
in the back of the room, the artcool blends seamlessly with the
interior d'cor of the living room.

LG incorporated classic art pieces of world famous painters
such as Van Gogh and Mondrian on the front panel of its Artcool
air conditioners and they have been a smash-hit.