Daikin Industries, Ltd. (based in Osaka, Japan, COO: Yukiyoshi Okano) and Gree Electric Appliances, Inc. of Zhuhai (based in Zhuhai, Guangdong Province, PRC, President: Dong Mingzhu) have agreed that Daikin will commission Gree to manufacture 500,000 small inverter air conditioners, which Daikin will market in Japan in 2009. The two companies have also agreed to study four other areas of collaboration including joint development of residential air conditioners and joint procurement for such products for the Global market.
Daikin will plan and develop the products, Gree will manufacture for Daikin, and the products will carry the Daikin brand. Gree will establish a dedicated production line with special inspection equipment for Daikin products to assure product quality meeting Daikin's standard.
With tighter environmental regulations being enacted worldwide in the global market, the inverter technology developed by Japanese manufacturers to improve energy efficiency is attracting keen interest. By variable control of motor rotation, inverter air conditioners can reduce power consumption by 30% compared with ordinary air conditioners. Replacing the non-inverter air conditioners currently in use around the world with inverter units can significantly reduce power consumption by air conditioners, which accounts for about 30% of CO2 emissions from homes.
While nearly 100% of air conditioners in Japan have inverters, the ratio of the rest of the world is only 9%. For inverter air conditioners to further penetrate the market, production at low cost is essential.
Daikin has the world's No. 1 share in the inverter air conditioner market, while Gree is the world leader in non-inverter air conditioners. Their collaboration will help them expand the world market for inverter air conditioners and lead the global air conditioning industry's environmental protection efforts.
Combining Daikin's advanced energy saving technology and Gree's strength in materials and parts procurement and production, the two companies aim to produce high-efficiency, low-cost inverter air conditioners to open up new markets in areas where penetration of inverter air conditioners is low.
The agreement covers the following five areas of collaboration: (1) commissioning of production from Gree by Daikin; (2) joint development of inverter residential air conditioners; (3) joint production of compressors, electric components and other key components of air conditioners; (4) joint procurement of materials and parts; and (5) joint production of molds. Daikin and Gree will establish working groups with members from both companies to pursue effective collaboration that maximizes the strengths of the two companies.
For the Daikin Group, collaboration with Gree, with its massive production volume, is an opportunity to enhance the cost competitiveness of the entire group including O.Y.L. Industries.