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Regional News

Japan’s Daikin, thriving in Asia and India, sets sights on Africa

TOKYO (Reuters) —  Daikin Industries, the world’s largest maker of air-conditioning equipment, is turning to Africa for further expansion, 10 years after a successful gamble on sharing its key technology with a Chinese company.

As Japanese manufacturers such as Panasonic stepped back from home appliances over a decade ago to avoid price wars with Asian rivals, Daikin did the opposite, going head-to-head with the likes of South Korea’s LG.

Fighting off low-cost competitors through local partnerships and acquisitions, Daikin grabbed top share in markets such as India. Africa, where LG and China’s Haier are established giants, may seem like another difficult target for Daikin.

But Yoshihiro Mineno, Daikin’s senior executive in charge of Asia, said the company is used to silencing critics, recalling the controversy more than 15 years ago over its decision to target mass markets overseas.

“Many skeptics at the time said it would be impossible to make profits in the ‘volume zone’ in Asia, and that it was pointless to invest there,” Mineno told Reuters in an interview.

Conventional wisdom, he said, held that the 94-year-old company should focus on high-end markets.

Daikin saw limited potential for growth in that area, however, and executives knew the company would have to focus on low cost and high volume if it wanted to boost its global presence.

The company’s market value now exceeds those of electronics conglomerates Panasonic Corp. and Hitachi Ltd.

“If advanced technologies or added-value products are your only selling points, your rivals are likely to catch up and overtake you,” said Hideki Yasuda, an analyst at the research arm of Ace Securities.

“But Daikin’s business model is backed by cost competitiveness,” Yasuda added. “It’s among a few Japanese companies that can compete head to head with the Chinese.”