Trane Factory Targets Growing China Market

September 3, 2004
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Trane chillers in operation at an electronics factory in the Pudong section of Shanghai.
[Editor's note: This is another installment concerning HVACR-related developments in China, a country that is expected to be one of the largest users - if not the largest user - of such technology within the next few years. The News will continue to provide periodic reports of the Asian market in future issues.]

TAICANG, China - Trane, the air conditioning business of United States-based American Standard Companies, established its factory presence in China in 1995 with three joint ventures with existing Chinese companies. Today, the business has consolidated its manufacturing in one plant located in Taicang, Jiangsu province.

The Taicang city government, which owns a small percent of one of the factories, has been supportive of its growth.

"The local government was very helpful to our business when we decided to move our chiller production to Taicang," said Marco Wei, vice president and general manager, Trane Asia Operations.

"While we worked hard to ensure a successful technology transfer, the local government ensured that the necessary customs and tax information needed to complete the move was processed quickly and efficiently. Their efforts enabled us to provide uninterrupted service to our customers, which is essential in a highly competitive market like China."

Sales representatives attend classes at Trane Taicang. Classes are also offered in service and marketing. Five classrooms and a hands-on training lab are available at the plant.

Far East Is Getting Nearer

Over the past few years, Trane has expanded the manufacturing focus at the 150,000-square-foot complex to encompass a range of commercial and residential products from centrifugal, scroll, and screw chillers to heat pumps, air handlers, and fancoils. Also produced are short-ducted residential air conditioners, designed for installation in residential units that are made of concrete (a far more available material in China than lumber), and small water chillers, designed to avoid the use of direct-expansion systems.

The huge demand for air conditioning of all sizes in China has resulted in the plant producing virtually everything for domestic consumption. In just one year - from 2002 to 2003 - Trane's gross sales in China have grown more than 30 percent, according to the company.

Although the Taicang operation is currently Trane's only factory in China, the business has an extensive presence in the country with 29 sales offices, 13 commercial and residential air conditioning service centers, and 13 large central air conditioning service centers.

"China is unlike any other market in the world," said Rudy Nangoy, vice president of distribution in China.

"The rate of change has been extraordinary in the past five years as this fast-growing economy affords the average consumer purchasing power to air condition his home. As more people experience conditioned air, there's an expectation of the same type of indoor comfort where people are working, shopping, in restaurants, and hotels. That's the ripple effect of what we call the ‘economics of comfort climate.'"

Nangoy, who oversees Trane's sales and service operations and is a 30-year Trane veteran, added, "The government is also spending heavily on upgrading offices, schools, hospitals, and airports, and these buildings are typically air conditioned. Finally, you have foreign investors who make indoor air quality and comfort a priority when building factories and commercial and residential buildings. It's a very exciting time."

Meanwhile, Wei manages the Taicang plant. Included in his leadership team are Jimmy Wang, materials management; George Huang, manufacturing; Jerry Bao, customer service; S.Y. Chong, finance; Jim Yao, engineering; Charlie He, six sigma; Chen Guangcai, quality; Zheng Li, government relations; Chevy Zhang, human resources; and Bruce Martin, product sales support.

"We're here for the long term," said Wei. "That's why we are committed to developing our people, and we continue to invest in our business."

Trane uses signs along the road to let folks know who the neighbor is across the street, as with the Trane plant in Taicang.

Training Is Important

One of the most striking aspects of the Taicang plant is the amount of space dedicated to training.

The training area is large enough to offer five separate programs simultaneously, with seating for up to 50 people in the largest rooms. There is also a place set aside for hands-on training with equipment. Service, sales, and marketing staff members attend the regularly scheduled training.

"Training customers, sales people, service technicians, and dealers is one of our strengths," said Martin.

In fact, those gaining such training may be even broader, since Martin noted the term "dealer" in China might include a contractor, a retailer, or others.

While Trane has a long-standing reputation for building quality products, the business, like many of its Western Hemisphere-based counterparts, relies on certification and/or recognition from independent industry organizations when meeting potential customers. These independent organizations include Underwriters Lab, ISO 9000, Air Movement & Control Association International (AMCA), Eurovent, Air-Conditioning and Refrigeration Institute (ARI), and American Society of Mechanical Engineers (ASME).

"With many first-time buyers, trust is gained through checking certifications and recognitions and personally visiting the factory," said Martin, who noted that Trane established its presence in China through a distribution business more than 20 years ago. Today, Trane "is readily recognized as a supplier for big projects like plants and office buildings down to the smaller size convenience stores and bowling alleys," said Martin.

In fact, one aspect of The News' April visit this year to Trane Asia Operations was a chance to see eight of the company's chillers up and running at an electronics factory in the Pudong section of Shanghai, the part of that city that is experiencing the most dramatic growth.

Candid Camera

One aspect of production in Taicang is a camera focused on a chiller-testing area so purchasers of those units can use the Internet to view tests and also have statistical printouts of the results.

In the construction stage during the spring of 2004 at the Taicang facility was a product design center test facility, de-signed to help increase what Martin called the "speed to market" of bringing specific products to China. At the same time, the plant maintains "good communications with the United States to assure best practices and a quality process."

In the big picture, the Trane operation in China is finding a balance among keeping pace with a flourishing China economy, helping the country meet its energy needs, and providing indoor comfort solutions.

"We are introducing environmentally friendly products and services into the market," said Nangoy. "Our comfort systems are the most energy efficient in the world, which is particularly important in China where power shortages are common. We plan to play an active role in China's economic development in the years to come."

Look for more coverage of the Asian market in future issues of The News.

Publication date: 09/06/2004

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