FG Europe will exclusively distribute Chinese giant’s products in the UK, promising ‘not like previous Chinese entries into UK’
Chinese manufacturer Midea is coming to the UK, promising the world’s widest range of R32 systems from 2018.
The product’s exclusive distributor FG Europe UK has installed former Hitachi UK boss Martin Richards to head the company’s operations in the country. Midea’s technology is backed by what is claimed to be the first ten-year warranty in the industry.
Mr Richards said that the warranty strategy is intended to tackle traditional perceptions of Chinese air conditioning products and will see the company partnering with installers.
He said, “What we need to do with the Midea brand is elevate it out from the current perception of Chinese brands, which is frankly not where it needs to be.”
Mr Richards said the company appreciated there was hard work ahead in changing mindsets in a market that has traditionally been dominated by less than a handful of manufacturers. However, he argued that the strength of Midea’s manufacturing base and component availability formed part of a long-term strategy to meet UK needs.
With the Midea company having 18 manufacturing bases in China and an annual revenue of US24bn (£17.9bn) in 2016, Mr Richards noted the brand is relatively unknown in the UK. It is a significant supplier in other parts of Europe and China, both under its own brand and as an OEM manufacturer for other brands.
Mr Richards said the UK is a unique and challenging market for cooling products in that there are two companies with an 80 per cent share of the market. But he said this market share was the result of the partnerships those suppliers had with their own installers.
With a production line that makes significant use of robotics, FG Europe believes its 10-year warranty scheme reflects broader confidence in “state of the art” production that has been heavily automated.
The company is therefore seeking to push the brand with the warranty tied directly to its ‘Mi business partner programme’. This service, which can be carried out at its new facility in Newcastle or during an initial commissioning, will provide training to installers on appliances concerning settings, wiring and other functions.
Steven Robison, FG Europe’s sales manager for the UK and Ireland, said partners will be required to show an understanding of how to maintain the Midea appliance, before a warranty is sanctioned – and that the same contractor should be maintaining it.
He said, “Every year, that original installer needs to be the maintenance contractor who will provide that ten-year warranty. Because there is nobody better at looking after the original installation than the original installer. “
Mr Robinson added, “So for somebody else to turn up to a site in year four to maintain a product that they are unfamiliar with is not the best solution for us to gain credibility in the market place and look after our product.”
The business is particularly targeting the retail sector as a strong market for Midea to build the reputation of its brand in UK cooling. A couple of strong accounts are already to be in place with retailers, but not formally announced, Mr Robison added.
He said: “I think what the retailers are really interested to see is the pay backs. So they are replacing old stock with equipment that is uses R407C or R22. We can go to them and explain that the energy savings that we can offer with R32 kit, together with the installation costs and replacement of equipment will give a payback period of 36 months on average. So it makes sense for them to replace their old equipment with new equipment that from 36 months will see them making money back on that.”
R32 cost pressures
FG Europe said another part of its UK strategy would be focused on providing R32 solutions, ahead of further quota reductions on the use of higher GWP products coming into effect in 2018 as part of the F-Gas regulations.
The quota reductions are already putting significant pressures on refrigerant prices for R410A, the company said.
In February, Midea will officially launch a range of split and multi split products that use R32 - a move to make the company one of the first manufacturers to do so. It also claimed this product line will give Midea the widest range of equipment using R32.
The move comes hard on the heels of AC giant Daikin calling on fellow manufacturers to make the move to R32 in the UK (see RAC December).
The company is offering its R32 products at the same price as R410A ones, to ease the transition, and is also offering to contribute to the price of the new refrigerant. But at the same time, it is also encouraging installers not to overcharge their systems, so the offer is limited to the maximum pipe length of the system.
You can read more on Midea’s UK strategy in the January issue of RAC Magazine.