Interviewed by Syed Md. Rakeen, Team MBR

With over 6 years of experience in the air conditioner market, Md. Muhiminul Bari Mehedi is leading the sales of the air conditioner segment at Walton Hi-Tech Industries PLC. He joined the company as an Assistant Director in 2016. He is an alumnus of Islamic University of Technology, where he completed his graduation with a degree in Mechanical Engineering. He played a leading role in developing and launching the first intelligent inverter split-type air conditioner for Walton in 2018. Currently, he is working as the head of sales and coordinator of the air conditioner segment at Walton Hi-Tech Industries PLC. Team MBR was in conversation with Mr. Md. Muhiminul Bari Mehedi and fortunate enough to receive his take on the air conditioner market in Bangladesh.

Syed Md. Rakeen: As reported by The Financial Express, the air conditioner (AC) market in the country is expected to grow at a compound annual growth rate (CAGR) of around 16% during the period 2020–2026. What are the factors, in your opinion, that are driving this phenomenal growth?

Md. Muhiminul Bari Mehedi: The growth of air conditioners in Bangladesh can be attributed to numerous factors. As we know, Bangladesh is a hot and humid country, and temperatures are only expected to go up in the future. This is helping to drive demand for air conditioners, with people looking to seek relief from heat waves. Over the years, there has been a rise in income level of buyers so the people in our country are becoming more affluent with time and are now able to afford air conditioners. Rapid urbanisation has also played a vital role in driving demand for air conditioners. As people are moving to cities, they are seeking air conditioners to cool their homes and offices. Also, air conditioners nowadays have become affordable relative to previous years and it has helped cater to a wider range of buyers. The effect of environment has played a role as well with users becoming more and more aware of energy-efficient models. Manufacturers have responded to this demand by developing new air conditioners that are more efficient and use less power.

Syed Md. Rakeen: Local brands are dominating the country’s air conditioner market, holding around 70% to 75% of the domestic market share. Would you kindly share your insights on the competitive advantages local brands currently have against foreign brands?

Md. Muhiminul Bari Mehedi: Bangladeshi brands are becoming increasingly competitive in the air conditioner market space. Local brands are much more affordable than foreign brands, making them lucrative to most consumers in the middle-class segment. They also offer longer warranties than foreign brands which can prove to be crucial in the case of air conditioners. Although foreign brands tend to have a higher brand reputation than local brands, Bangladeshi brands have established a good reputation owing to our high quality of products. Additionally, the after-sales service for local brands is typically better than the after-sales service for foreign brands.

With increasing population, rising incomes and urbanisation, the demand for air conditioners is rising over the year. This has led to increasing opportunities for brands in Bangladesh. Additionally, the air conditioner market is becoming increasingly competitive. This has forced local brands to constantly innovate and improve their products and has also benefited the consumers who can now avail better products at competitive prices.

Syed Md. Rakeen: Most buyers of consumer electronics now perceive air conditioners as necessities, which used to be considered luxury products just a few years ago. What are the drivers of this change in mindset from your perspective?

Md. Muhiminul Bari Mehedi: Well, numerous factors have contributed to the change in mindset about air conditioners.

Air conditioners are known as one of the most energy-consuming home appliances. As energy costs have only increased with time, there has been a rise in energy-saving technologies in the market. This has led to people becoming a bit relaxed about the energy consumption of the air conditioners.

On the other hand, climate change is causing extreme weather conditions to become more frequent and severe. Generally, people in Bangladesh experience hot and humid weather more frequently, which puts their health at risk of heat-related illnesses, especially for adults, young children, and people with chronic health conditions. People have grown aware of such risks and are now opting for air conditioners to protect their health and have some comfort.

In addition to that, ACs nowadays are relatively cheaper than before, making them affordable for a wider class of people. Additionally, customer expectations have played a part as well. Customers nowadays want energy-efficient, convenient, and easy-to-use air conditioners at lower prices. Local brands are now capable of fulfilling the expectations of their customers.

Syed Md. Rakeen: Manufacturers of consumer electronics have introduced various energy-efficient and eco-friendly variants of air conditioners in the market. How are these newer models of air conditioners currently faring in the market?

Md. Muhiminul Bari Mehedi: Energy-efficient and eco-friendly air conditioners are becoming more popular with time. It is because the models are becoming less expensive to operate than traditional air conditioners. Now, less energy is required to cool a room, saving customers from racking up huge energy bills. Also, these air conditioners have a much smaller impact on the environment than traditional air conditioners, with the refrigerants possessing a lower global warming potential.

Additionally, energy-efficient and eco-friendly air conditioners have convenient features; some models possess smart thermostats that help users control the temperature of the air conditioner remotely via smart devices.

Syed Md. Rakeen: Air conditioners come with various functionalities and capacities. Also, there is a wide range of sizes and shapes. Would you kindly share how the customer segments vary in accordance with functionalities, capacities, sizes, and shapes?

Md. Muhiminul Bari Mehedi: The customer segments largely vary according to air conditioner functionalities, capacities, sizes, and shapes. Generally, people who live in small apartments opt for portable air conditioners due to their mobility. Users in large homes are more interested in buying central air conditioners to cool the entire house. Some users with allergies or asthma are interested in buying air conditioners with UV features due to their ability to remove pollutants and allergens from the air. For people who fear racking up electricity bills, energy-efficient features are more preferable compared to other air conditioners. In terms of functionality, there are two types of air conditioners preferred by users these days.

a) Split Air Conditioners: For people who prefer a permanent solution for cooling their houses or businesses, this remains the most popular option. These air conditioners consist of two units: an outdoor unit and an indoor unit. The outdoor unit contains the compressor and condenser, while the indoor unit contains the evaporator. Split air conditioners are more powerful than old-fashioned window air conditioners.

b) Central Air Conditioners: Central air conditioners are the most powerful type of air conditioner and are a good option for people who want to cool their entire houses. Generally, these air conditioners are installed near the attic or crawlspace of a home and cool the entire house.

The preference for capacities depends on the size of the spaces the users want to cool. For example, a small bedroom may require a 12,000 BTU air conditioner, while a large living room may require a 24,000 BTU air conditioner.

Syed Md. Rakeen: Air conditioners are currently being manufactured locally and come with affordable price tags. How do these locally manufactured air conditioners contrast with foreign brands in terms of features and quality?

Md. Muhiminul Bari Mehedi: Locally manufactured air conditioners contrast with foreign brands in terms of features and quality in a few key ways.

a) Features: Nowadays, locally manufactured air conditioners have more lucrative features than foreign brands. For example, Walton air conditioners have introduced Extreme Saver, Supper Saver, UV-Care, and Voice Control technologies that other global brands cannot offer.

b) Quality: The quality of some locally manufactured air conditioners is even better than that of global brands. Some locally manufactured air conditioners are made with high-quality components and offer a good level of performance with after-sales services.

c) Price: Locally manufactured air conditioners are typically much more affordable than foreign brands.

Syed Md. Rakeen: Due to the impact of seasonality, air conditioners often run out of stock during the summer. In your opinion, what are some of the key challenges that air conditioner manufacturers and suppliers face in meeting the demand in Bangladesh?

Md. Muhiminul Bari Mehedi: The demand for air conditioners in Bangladesh is highest during the summer, when temperatures soar. This can lead to shortages of air conditioners and higher prices. Also, most areas in Bangladesh face load shedding due to a heavy demand for electricity, which creates some difficulties when using air conditioners. This can discourage people from buying air conditioners or make them choose alternative solutions for their comfort. Additionally, there is a shortage of skilled technicians in Bangladesh who can install and repair air conditioners. This can lead to problems with air conditioners not being installed properly or not being repaired correctly when they break down.

Syed Md. Rakeen: Rising temperatures and local manufacturing of affordable air conditioners will surely make market demand go up even further. How do you envision the future of the air conditioner market in Bangladesh?

Md. Muhiminul Bari Mehedi: The future of the air conditioner market in Bangladesh is bright. The country's hot and humid climate, coupled with rising temperatures and increasing affluence, is driving the demand for air conditioners. Local manufacturing of affordable air conditioners is expected to play a major role in the growth of the market. As more local companies enter the market, competition will increase and prices will come down. This will make air conditioners more accessible to a wider range of people. As a result of these factors, the air conditioner market in Bangladesh is expected to grow at a compound annual growth rate of 12–15% in the next five years.