Midea, one of China’s largest home appliance makers and best known brands is forging inroads into the large Indian consumer market. The consumer durable maker has joint hands with Carrier Corp. to forge a joint venture with a combined investment of US$33 million to undertake production and distribution of air-conditioners in India, home to the world’s second-largest population.
The Chinese company will take a 60 percent stake in the JV through an injection of US$20 million, with Carrier, a unit of US manufacturer United Technologies Corp. (UTC), making up the rest. Midea and Carrier will inject their residential air conditioner production and sales businesses in India into the JV, which is expected to have an initial annual production capacity of 1 million air-conditioner units.
The Guangdong based company, in South China, is already retailing its consumer durables in more mature westernized markets such as Europe and the US, however due to the financial downturn both in China as well as the west, Midea has decided to pour its investments into the more lucrative Indian market.
Midea will enter the Indian market in a way which is similar to other large Chinese brands and is becoming increasingly popular even as relations remain sweet and sour between the two countries. A common practice now, Chinese companies tie up with western firms who help pave their entry into India. Since it isn’t easy for Chinese firms to enter the Indian market space, many piggy-back on the reputation of western firms which are welcome to the world’s second largest consumer market. Chinese firms in turn provide the low-cost product and the western firm provides its marketing expertise – a winning combination in the Indian market space which is constantly evolving.
Midea’s sales growth slowed in the second half of 2011, with revenue up 43.24 percent year-on-year in the January-September period, compared to an increase of 59 percent in the January-June period, according to the company’s earnings reports for last year.