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July 7, 2014

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BDR gears up tapping China

BDR Thermea, Europe’s leading heating system manufacturer, describes China as its “No. 1 opportunity” as it mulls local production.

Higher levels of income and living standard and the government’s effort to fight pollution are benefiting BDR, said Fulvio Menegotto, head of the international business of the company.

BDR said its highly-efficient boilers and water heaters, which can run on natural gas, could recover and use heat, making them more economical to run and better for the environment. Boilers are the most popular appliance for providing central heating and hot water at home throughout Europe. They can either be wall-hung or floor-mounted.

China accounts for more than a tenth of BDR’s export turnover, and the share will “increase remarkably” in the future, he said in a recent interview in Boao, Hainan Province, where it held an industry summit and its management meeting.

BDR, which owns brands such as BAXI and De Dietrich, has tripled sales in China since 2012, according to Eric Xie, BDR’s country head in China.

Typically, BDR has to cooperate with property developers in north China where existing homes usually have access to centralized heating. But in south China, it’s targeting the individual retail market as people seek comfortable life in winter.

Now, more growth is coming from the south partly because tightening policy has hit the new residential building market, Xie said, though he added the commercial building market is still doing well in China.

“A growing number of Chinese domestic brands that traditionally took northern provinces as their stronghold are now walking into the retail market in the south, so you can see where the growth is,” Xie said.

Rising demand in China has seen BDR develop tailored products for the country, such as boilers with smaller capacity because a typical Chinese home is smaller than one in the West.

The growing market is also prompting BDR, which currently sells imported products in China, to consider setting up local manufacturing.

John McCarthy, manager at the international and export business at BDR, said local production in China has been part of “strategic thinking.” BDR could go for a greenfield project in China, or do it via acquisitions or joint ventures with Chinese companies, he said.

Also, he said consolidation is needed in China’s highly fragmented heating market just as what has already happened in Europe.




 

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