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.