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Case Study

Overcoming adversity through innovation – Daikin at 100 (C): China market lessons

By Kazuo Ichijo and Yunfei Feng

6 pages

December 2024

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Reference: IMD-7-2620

Daikin’s success in the Chinese air conditioning market serves as a compelling case study in strategic adaptation and collaboration. Following its entry into the market in the 1990s, Daikin faced formidable competition from well-established domestic brands like Gree and Midea. Despite the initial challenges of breaking through in a fragmented and competitive landscape, Daikin’s innovative inverter technology became a distinguishing feature of its product offerings. The watershed moment in Daikin’s trajectory occurred in 2008 when it formed a strategic partnership with Gree, China’s largest air conditioner manufacturer. This collaboration enabled Daikin to tap into Gree’s expansive distribution network and manufacturing expertise, significantly enhancing its own market reach. The partnership proved mutually beneficial; Gree capitalized on Daikin’s advanced inverter technology while Daikin secured a foothold in a market driven by increasing consumer demand for energy-efficient solutions. By 2012, inverter air conditioners claimed over 60% of the Chinese market share, a figure that surged to over 90% by 2024, illustrating the success of their joint efforts. Furthermore, Daikin’s commitment to sustainability was manifested in its pioneering use of HFC-32 refrigerant, known for its low global warming potential. By openly licensing HFC-32 patents globally, Daikin not only positioned itself as an environmental leader but also fostered industry-wide innovation. This case highlights the critical importance of strategic partnerships and innovation in overcoming competitive challenges and underscores Daikin’s role as a transformative force in the global air conditioning market.

Learning Objective

Navigating competitive markets through collaboration: Analyze how, rather than solely focusing on rivalry, companies can strategically enter highly competitive markets by leveraging partnerships with competitors, demonstrating that collaboration can lead to mutual success.
Creating win-win scenarios: Explore the strategies employed by Daikin and Gree that enabled them to coexist and thrive in a crowded marketplace, highlighting the importance of finding common ground with competitors for shared benefits.
Building a responsible business model: Discuss the significance of corporate social responsibility and sustainable practices in building a reputable brand, illustrating how businesses can achieve profitability while positively impacting society and the environment.
Driving technological advancements for competitive advantage: Examine how shared innovation can lead to breakthroughs in technology, emphasizing the role of joint ventures in advancing industry standards and improving overall market offerings.

Keywords

Global Business, Strategy, Sustainability, Globalization, Innovation, Responsible Leadership, General Management

Settings

World/global, Japan
Daikin Industries, Consumer Goods, Home Appliances
1924-2024

Type

Published Sources

Available Languages

English

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This case study is part of a series

Overcoming adversity through innovation – Daikin at 100 (A): Leadership lessons
Overcoming adversity through innovation – Daikin at 100 (C): China market lessons

This case study is part of a series

Overcoming adversity through innovation – Daikin at 100 (A): Leadership lessons
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