(Yicai) May 29 -- TCL Technology Group, a Chinese display and white goods maker, plans to invest CNY1.5 billion (USD200 million) in a new smart factory to increase its ability to make and export air conditioners.

TCL’s air-conditioning business still faces a production capacity shortage, Chen Shaolin, senior vice president of TCL Industrial Holdings and general manager of TCL’s air-con division, told Yicai at a forum yesterday.

The new factory is scheduled to break ground in September, Chen said. Located in the Nansha district of Guangzhou, it will likely produce 8 million units a year, which will mainly be exported. TCL’s Zhongshan base will also expand its capacity to 15 million units this year from 11 million last year, he noted.

The Chinese market for air conditioners is approaching saturation due to intense competition, according to Long Fei, an analyst at ChinaIOL. Their penetration rate in overseas markets is relatively low, with diversified product demand, Long said, adding that Chinese makers have stepped up efforts to develop their brands internationally.

The advantage of Chinese companies lies in the high cost-performance ratio of domestically made aircons, ample production capacity, and guaranteed quality, while the disadvantages are that Japanese and South Korean rivals got a foothold in overseas markets earlier and have stronger brand influence, Long pointed out. 

Huizhou-based TCL has been growing its air-conditioning capacity, building a smart factory in Wuhan in 2022 to turn out 7 million units a year, mainly for the home market, and a plant in Brazil the same year with an annual capacity of over 1 million. It also has production bases in Jiujiang, Jiangxi province, and in Indonesia.

Editor: Martin Kadiev