The Asian Market Booms

For many U.S. industries, China is the new frontier. GAMA, for instance, set up a satellite office in Beijing this year, as more and more of its members are either looking to get into the Asian market or need assistance in the Asian market.

"The idea of opening an office in China to serve as an informational resource for participating GAMA members and to promote harmonization of U.S.-Chinese standards for space conditioning and water heating products is the result of a common theme that cropped up in many of my one-on-one conversations with GAMA members - the increasing importance of business opportunities for our industries in China," said Evan Gaddis, the association's president.

With nearly 1.3 billion people, its turn toward a market economy, and its emerging middle class, China is, as Gaddis put it, "too important to our industries to ignore."

According to facts and figures from the China Internet Information Center, national economic growth has continued at a rapid pace in China. In a March 1 report, it noted that the 2003 gross domestic product (GDP) was $1,405.9 billion (U.S.), an increase of 9.1 percent, or 1.1 percentage points more than the previous year at comparable prices.

The chiller test stand at the York plant in Wuxi. York has been producing Chillers in China since 1996.

Overall, the country's GDP has quadrupled since 1978. This figure helps show the progress made in China since the end of the 1970s when China's leaders, mindful of the gap in economic growth between China and other countries, made the decision to reform its economic system.

According to the International Trade Administration (ITA), the establishment of a housing fund in China that offers low-interest loans and local tax breaks has led to greater demand for affordable housing and has encouraged home ownership. Therefore, the market potential for construction and building materials in China continues to grow.

During the next three years, according to ITA, government officials plan to increase spending on new homes by 15 percent, investing $97 billion in infrastructure and residential housing construction. Along with the increase in development, the reforms have encouraged the use of energy-efficient and environmentally friendly building materials. This opens the market for American-made building products, including HVACR equipment.

Vagn Helberg, president of global operations for refrigeration and air conditioning, Danfoss A/S, is interviewed by Bloomberg reporter Samuel Shen at the expo in Shanghai. (Photo courtesy of Danfoss.)

The cost of shipping large air conditioning and refrigeration equipment from Western Hemisphere facilities to the Far East can be prohibitive. Opening production facilities in China gives those companies a competitive foothold in the region.

Danfoss, for instance, first registered in the Wuqing Development Area in 1995. In less than a year it started production of radiator thermostats in what proved to be a temporary facility. Construction started on a new plant in 2001; the 125,000-square-foot facility opened in 2003.

Since that time, the company added an additional 135,000 square feet. Having reached space limitations at that location, the company said this year it was eyeing two other sites nearby that it had previously secured for still more expansion.

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The News sent refrigeration editor Peter Powell to China for a firsthand report on the China Refrigeration Expo (CRE), held this spring in Shanghai. Powell reported that U.S. component manufacturers showcased their products for Asian OEMs.

Production areas at Greenheck Kunshan are labeled in two languages — Chinese and English.

ARI's William Sutton said CRE "brings the manufacturers of many countries together to share ideas and discuss ways we can better serve society. It provides a showcase that inspires all of us to display the latest and best technology. And, it provides a marketplace that will lead to business agreements, joint ventures, and investments that will bring many long-term benefits to China."

Yet another perspective on why the expo was important came in a comment from Fred Poses, chairman and chief executive officer of American Standard: "China is a vital part of Trane's global business and we look forward to being a part of this nation's great economic growth."

Publication date: 12/27/2004

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Mark Skaer Senior Editor. E-mail him at markskaer@achrnews.com.