R744.com talked to Brian Davis, Senior Global Sales Director of Danfoss during the 2013 China Refrigeration Exhibition on the latest CO2 technology developments and the company’s market strategy in China. Whilst high technology efficiencies have been proven, customer education is needed to expand market uptake +VIDEO
R744.com: Compared with other markets, how does Danfoss market CO2 technology as an easy choice for end users in China?
Brian Davis: We recognise that in China there is a strong sensitivity to safety issues, namely personal safety, food safety, etc. There is also a need to improve the operating efficiency. What is different in China is that in some parts of the country the level of awareness of CO2 technology is not as high as in Europe. Therefore Danfoss has some work to do to educate and train customers. We have to enlighten customers about the advantages of CO2, and that being environmental friendly will not affect the security of employees, the safety of food, nor will it impact efficiency in a negative way. In fact, CO2 technology will influence efficiency in a positive way. So compared to the strategy in other markets, Danfoss has to invest more in training, in educating the customer and making sure our own employees are well versed in the advantages of the technologies so that they can best advise our customers.
R744.com: Costs are usually one of the main considerations of end users. Does Danfoss have a solution to reduce the costs of natural refrigerant-based technology for end-users?
Brian Davis: Yes. Danfoss has proven that the operating efficiency of natural refrigerant solutions can be 5-10% higher than that for alternatives, meaning the operating costs are 5-10% lower. Danfoss makes it clear to our clients that the total cost of ownership (TCO) is lower with natural refrigerants. Those customers seeing their competitor’s utilising natural refrigerant technology will most likely become second level adopters, once Danfoss explains the benefits of natural refrigerants. The technology is proven not only in Europe, Northern America and South America, but also in Asia. Are customer’s ready? Generally speaking, we think they are.
We understand that the Industrial refrigeration is sometimes a conservative market and new technologies typically need a longer time to be adopted by customers. We’re not interested in just earning business today. Danfoss has a commitment to this industry’s long-term future. In the Chinese market, Danfoss can provide solutions both for today’s adopters of natural refrigerant technologies as well as for tomorrow’s technology adopter’s.
R744.com: Some industrial experts believe CO2 refrigeration technology’s time as a global mainstream refrigeration solution is coming. What do you think?
Brian Davis: That’s a good question. When you think about the drivers that bring interest in natural refrigerants, one of the main drivers is environmental protection. We all share the same earth, the same environment. Although some markets are a little bit ahead of others in terms of regulation on pollution and emissions, we all need environmentally safe and efficient systems. I believe these drivers for sustainability are going to drive the market for CO2 technology.
R744.com: Is this also true for China?
Brian Davis: Yes. I think one thing that the Chinese market demonstrates is a real sense of urgency. Things get done quickly in China. There’s a very easy way to mobilise resources to make quick decisions. If we look at the next few years I don’t think people will be saying China is not as prepared for natural refrigerants as the Western world.
R744.com: What will be the key market strategy for Danfoss in China in the next few years?
Brian Davis: There is basically a three-tier market in terms of products. For the low-end market, where products are manually operated and offer very low technology, Danfoss does not participate. In the mid-market, Danfoss has product lines that can meet the requirements of nearly all typical installations, with proven semi-automatic technology. In the high-end market, products are fully automated. These products are installed in refrigeration systems that are operated automatically, and generally employing electronics. High end products perhaps are not suitable for all customers because in China, as some end users are still sensitive to the initial (installed) costs. Danfoss’ strategy is to take the customers of the low-end products and convince them to spend a little bit more money to get a product that is of world-class quality, safety, and operating efficiency. The second part of our strategy is to take the customers that are already at the mid-level market and convince them to invest in fully automatic controls to reap the maximum benefit of our technology.
As more and more Chinese end users become regional and then develop to become global players, they will need to utilise the same kind of technologies the global companies in Europe and North America employ. Further, there are more and more Western companies that see China as a growth opportunity and want to invest. They are not going to reduce the specification of their systems to the same level as their local competitors. Rather, they will maintain the same high level of quality and automation in their systems. All of these trends create opportunities for Danfoss to develop alongside our customers.