AC-maker hopeful demand will gain pace in Pakistan

Hisense investing $800,000 for establishing a new air conditioner assembly line in Pakistan


​ Our Correspondent March 12, 2020
PHOTO: REUTERS

KARACHI: With the ever-increasing temperature and an improvement in access to electricity in Pakistan, the electronic goods' manufacturers remain hopeful that the market for air conditioners will pick up pace in the months to come.

"The current production capacity of air conditioners in Pakistan is one million units per year, which grows at a pace of 5%," said Hisense CEO Imran Ghani at a press briefing. "The growth is expected to accelerate as electricity supply improves further in the country."

The company is investing $800,000 for establishing a new air conditioner assembly line in Pakistan. The new plant will have the capacity to produce 150,000 units per year.

At the initial level, the company is utilising 20% of its production capacity and producing 35,000 units in a bid to test the market in its first year. The company is testing markets in all four provinces to find out how each of them reacts with regard to its products.

"Once we learn dynamics of the four markets, we will enhance the utilisation of our production plant from 20% to 60% next year," said the CEO.

Despite the fact that coronavirus and volatility in the international economy had slowed down global economic activities, the Chinese company would press ahead with its investment plans in Pakistan, said the CEO.

The company had envisaged in 2018 to introduce 12 electronic products over the next seven years. In 2022, it aims to establish a refrigerator assembly line in Pakistan with an investment of over $1 million.

"Existing manufacturers of air conditioners like Samsung, Sony and LG are losing their market share to unbranded Chinese products, which have lower price tags," said the CEO. "We have decided to price air conditioners close to the prices offered by such sellers, who supply non-durable products."

He revealed that these sellers were price-conscious and searched for the least-priced products in the Chinese market and brought them in Pakistan. He pointed out that sometimes the suppliers sold such products by falsely labelling them as branded.

He added that the strategy worked for a short period of time because consumers understood the reality and moved on to Pakistani brands. "This is the opportunity we are tapping," he said.

"Hisense spends 5% of its revenue on research and development," the official revealed.

"In Pakistan, there is a belief that expensive products have better quality," he said. "However, we have a different attitude and believe that quality should increase and prices should fall with time and new technologies are achieving this."

With improved technology, the new air conditioners accompany electricity inverters, which save 60% of energy while slashing maintenance cost by 50%, he said.

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