Chinese Airconditioning Market Heats Up As Gree Publicly Criticizes Aux Products

Gree Electric Appliance
An air conditioning unit produced by Chinese manufacturing company Gree (Photo: Flickr.com / Public Domain)

The battle for dominance in China's lucrative air-conditioning business is reaching its boiling point as two of the country's largest manufacturers continue their public spat. Gree Electric Appliances has now filed a formal complaint with Chinese regulators with allegations that its rival Aux Group is producing substandard products. The companies are now at each other's throats as the country's largest shopping gala approaches.

According to a statement posted by Gree on social media on Monday, it had apparently discovered that Aux was mislabeling its products. The company alleges that eight of the models being produced and sold by Aux have the wrong energy efficiency labels. Gree claims that this is against the mandate of the China Consumers Association for manufacturers to provide reliable and quality products to consumers.

The company followed up its allegations with an inspection report from the Sichuan Institute of Electron Production Supervision. The report apparently shows that eight products from Aux did not meet production standards.

China's State Administration for Market Regulation announced on its website earlier in the week that it has already ordered local market regulators to investigate Gree's claims.

The agency also stated that it takes these kinds of allegations very seriously and it will get to the bottom of it as soon as possible.

In response to Gree's allegations online, Aux threatened that it will be filing a lawsuit against the company. Aux claims that Gree's action was a clear act of unfair competition and that it was intentionally degrading its products just days prior to the country's biggest shopping event.

The upcoming event, set to happen next week, is the peak season for air conditioner sales. Aux explained that Gree had intentionally ruined the reputation of its products to boost its own sales.

Aux has had a good year so far, with its online sales numbers rising by more than 56 percent during the first quarter. Meanwhile, Gree's online sales numbers have dropped significantly, by as much as 11.6 percent during the same period. The upcoming shopping gala, which will start on June 18, is a big deal for electronics and appliance manufacturers.

Airconditioner manufacturers will stand to significantly boost their sales during the event, likely lifting profit margins for the rest of the year. Aux's low-price strategy and its aggressive push into e-commerce have managed to topple down Gree's e-commerce dominance in the country.

Both companies had previously battled in court, a fight that eventually resulted in Aux paying Gree $5.8 million for violating its intellectual property rights. Despite losing in the case last year, Aux still managed to pull in massive revenues. Aux currently ranks first in online retail sales, with a market share of around 26.02 percent.

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