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Big Air Conditioning Brand Pulls The Plug On China Urges Others To Follow

A leading air conditioning Company has moved to pull the plug on buying components from Chinese manufacturers and is urging other manufacturers to follow their lead.

Japan’s Daikin Industries have announced that they will not have to rely on Chinese made components by 2024 due to political tensions and continued interruptions to their supply chain due to COVID lockdowns.

Daikin, one of the world’s top air conditioner makers, will make its own core components, including parts that help conserve energy.

The business is also urging their suppliers to follow their lead and ditch China altogether.

According to Nikki Asia Japanese Companies have concentrated their production bases and parts suppliers in China where labour and overheads are cheaper however political tensions across the world, bans and COVID has led to a total rethink of their manufacturing strategies.

Daikin is just one manufacturer whose products are widely sold in Australia that has in the past relied heavily on China for parts since the mid-2010s, importing 35% of its needs, on a value basis, from the country in 2020. T

that figure dropped to 20% in 2021, but the lockdowns in Shanghai this year, a result of Beijing’s strict measures to contain the spread of COVID-19, led to a fall in the production of some parts, impacting Daikin’s output.

Now Daikin is buying parts from other Southeast Asia Countries such as Malaysia and Vietnam.

It will request suppliers that have factories outside of China to produce them and also encourage those with production bases only in China to build new plants elsewhere.

It will also provide production guidance to reduce costs, with the introduction of automated equipment and robotics.

Daikin began producing printed circuit boards at its base in Japan’s Shiga prefecture after Shanghai was locked down, and recently began producing in Malaysia as well. It also plans to produce motors at multiple locations.

Since the pandemic triggered a global shortage of semiconductors, Daikin has been devising ways to ensure the stable procurement of parts, such as by sharing inventory information among its production bases in each country and developing alternative products.

This has allowed them to cut reliance on Chinese producers.

Daikin claims that only 3,000 parts are needed in their production, a tenth of that required for automobiles.

While moving away from Chinese-made parts will result in an increase in procurement costs, Daikin sees it as security against future emergencies.

Japanese companies have begun to make this move. A total of 12,706 companies were operating in China as of June, down 940 from the previous survey conducted in 2020 and the lowest in the past 10 years, according to research firm Teikoku Databank.

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