The Chinese appliance manufacturer is optimistic about its ascending position in Latin America. A series of events mark a first half of great recovery in Chile, including new high-tech products.
Going from launching 100 products to opening of its online store at Mercado Libre, Midea's year start in Chile has been busy.
“We are the largest manufacturers [of household appliances] in the world (…) In some manufacturing lines, in some production lines we have more than 70% of global manufacturing,” says enthusiastically its general manager, Luis César Fabio, explaining the reasons behind this growth and how it is consolidating market share in the country and in the region.
The company has just recorded a positive 2023, reaching global revenues of a little more than US$50 billion, which represents a year-on-year increase of 8.10%. “That's tremendous. It is growth, as we say, against the grain or in the face of adversity,” adds Fabio.
In the words of the manager himself, even before the complex context of the COVID 19 pandemic, the company has not stopped investing in digital transformation and sustainable development in addition to invest close to 5% of sales (more than US$ 2 billion) in research and development to improve their products. “And not all brands can tell you that, because investing in research and development when you are in a pandemic means that you are convinced that when that ends you will be stronger,” he clarifies.
However, the company had to face a difficult 2022 in several countries in the Americas. “Our industry fell by about 40%,” recalls Fabio. And without bonds and with high inflation, people chose not to buy more than the essentials for several months. “It was sailing in turbulent waters,” he acknowledges.
Additionally, partnering with the real estate market also proved to be a challenge, as the pandemic stalled many construction projects, thus making it difficult to sell products designed for the residential sectors.
“Building permits, which we mapped six months in advance, fell by nearly 50%. Imagine what it means to know that for the next six months nothing is going to be built,” he adds.
At the end of that year, when the pandemic was little by little controlled, the situation stabilized and Midea was able to move forward with its growth plan.
BUSINESS CENTER
In addition to its headquarters in Chile, Midea has operations in Argentina, Colombia and Peru where, according to the general manager, they try to maintain high quality standards, with the same line of work and efficiency of other countries. “It's the same product,” he points out. “Obviously, the technical voltage systems must be reviewed, but in the factory we have the same product matrices. It's a bit like what is done with vehicles,” he details.
Likewise, he explains that the strategy behind this growth is summarized in new technologies, new products along the same lines and regional expansion, having Chile as a base to later expand to other countries such as Bolivia, Paraguay and Uruguay. “We became a business center,” he asserts.
Along these same lines, he comments on the recent start of activities in Brazil. “It will allow us to strengthen the Brazilian market, where the competitive workforce is very demanding, because we compete with Brazilian brands, which were in Chile for some time.”
Precisely, the rise of Midea in the region is taking place within an extremely auspicious scenario. According to the research site Informes de Expertos, the Latin American home appliance market has experienced notable growth, reaching a value of US$57 billion in 2023, with a projected compound annual growth (CAGR) of 5.3% by 2032.
The factors that explain this increase include rising demand for large appliances, especially in more urbanized sectors, where there is a need to reduce the time dedicated to household tasks. Also, the increase has come in hand with the growing popularity of smart and energy-efficient appliances, something that is evidenced by the emergence of Artificial Intelligence in the different areas of daily life.
“Midea started making drink tapas. That was its first factory. Then we evolved. We manufacture coffee machines and then all household equipment. We went from being, in air conditioning, a dominant brand in terms of volume. Today we are growing in new technologies, that is, upselling products. More modern technologies, connected technologies, all launch products with Wi-Fi, developing other more efficient technologies in terms of heating and air conditioning,” says Fabio.
Furthermore, at its event Midea also showed the brands Eureka and Toshiba, white goods, to mark its presence before consumers.
“Toshiba is of a higher technological level. Much closer to the levels of the most premium brands. And Eureka is a brand that responds to the needs of our construction and real estate consumers,” explains Fabio.
And to have a greater reach towards new users, Midea has partnered with the Mercado Libre platform to implement its official store for the home market.
Another way that Midea has found to position itself in the region is related to air conditioning projects for other institutions, such as air conditioning projects for the Cinépolis cinema chain and for the Club Deportivo Universidad Católica stadium, both in Chile. Something very similar to what he did with different stadiums in Qatar for the last World Cup or the presence on the shirt of Erling Haaland, of the Manchester City club, who has become a global ambassador of the brand.
Midea's goal is to maintain this good streak of regional expansion. With the experience acquired in 2022, manager Fabio is more enthusiastic, especially for his real estate business, despite the fact that mortgage interest rates still remain high in Chile.
“The growth plan for this year aims to double digits, more than 10%, with a market that is not growing at the same rate,” he concludes.
