Daikin Holds Strong Profit Levels in China Despite Real Estate Slump

Direct-to-consumer strategy and high-value products offset weak housing demand and cautious corporate investment.

In China, Daikin faced a challenging environment as the property market continued to deteriorate and consumer sentiment remained weak. As a result, sales fell below last year’s level, though the company managed to maintain a high level of operating profit. This was achieved through stronger support for its PROSHOP dealer network, customer-focused marketing, and more direct-to-consumer sales efforts, while also expanding sales of premium products and enhancing cost controls.

For the housing market, Daikin emphasized both offline and online channels. The company deepened its presence in physical stores, while also using showrooms for live-streaming, online ads, and social media promotions. It introduced energy-efficient and carbon-neutral products, along with IoT-enabled smart appliances, to offer tailored solutions for modern lifestyles. These efforts successfully tapped into demand for residential renewals. Sales of multi air-conditioners for homes reached 99% of last year’s level, showing resilience despite the tough market.

In the commercial segment, Daikin benefited from China’s carbon-neutral policies, which supported projects in government facilities, factories, and green buildings. This drove demand for energy-saving solutions and reinforced the company’s solution business model.

Meanwhile, in applied products, Daikin focused on maintenance and after-sales services, but new investments from manufacturers slowed, leading to weaker results.

Performance compared with the previous year:

• Residential: 98%
• Commercial: 81%
• Applied: 82%

Looking forward, Daikin’s strategy in China highlights its adaptability. By combining offline and digital channels, focusing on eco-friendly innovation, and maintaining strict cost management, the company is positioning itself to weather the downturn and capture growth once the market stabilizes.

Explanation of Key Terms

• PROSHOP: Daikin’s specialized dealer network in China, offering professional consultation and installation services.
• Carbon Neutral Policy: China’s government-led initiative to reduce carbon emissions, which creates demand for energy-efficient and green building solutions.
• Applied Products: Large-scale air-conditioning systems designed for industrial and commercial facilities, requiring significant investment from manufacturers.

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