In the air conditioning industry, a typical freezing year spans from September of one year to August of the following year. In the 2025 freezing year, China's household air conditioning industry achieved a historic milestone by exceeding 200 million units in production and sales. However, at the same time, fierce price competition has also placed the industry at a crossroads of transformation.
Based on the mainstream sales situation, Gree, Haier, and Midea continue to rank in the top three, while brands such as Hisense, Chigo, Samsung, Panasonic, Aux, Daikin, and Mitsubishi jointly constitute a diversified competitive landscape in the market.
Industry turning point
The air conditioning industry in China is transitioning from a traditional phase of scale expansion to a high-quality development phase driven by technological innovation. After decades of development, the air conditioning industry has formed a complete industrial chain and achieved significant scale advantages.
This transformation is not only a choice made by the market, but also a result of policy guidance. In 2026, the policy of trading old for new will continue to be implemented, but the subsidy for home appliances will be adjusted.
Galaxy Securities' analysis points out that the national subsidy, as one of the means to boost consumption, will continue to be implemented, but the subsidy intensity for home appliances, which previously benefited the most, will significantly decrease. The new policy requires that subsidies for trading old home appliances for new ones must be targeted at first-level energy efficiency or water efficiency products, with a subsidy standard of 15% of the product price and a single-item subsidy cap of 1,500 yuan. This change has a direct impact on the product structure and research and development direction of air conditioning enterprises.
In this context, enterprises are paying more attention to enhancing product added value through technological innovation. The subsidy policy explicitly expands the subsidy for purchasing new digital products to include subsidies for purchasing new digital and smart products, with support extending to smart home products.
This policy orientation provides clear incentives for enterprises to develop artificial intelligence air conditioners. In the notice jointly issued by the Ministry of Commerce and six other departments, it is explicitly encouraged for all regions to focus on supporting the new generation of intelligent terminals specified in the "Artificial Intelligence Plus" action plan of the State Council.
Currently, the competition in China's air conditioning market exhibits a clear hierarchical differentiation. As the first tier, Gree, Haier, and Midea occupy a dominant position in the market, leveraging their years of technological accumulation and brand advantages. The second tier includes brands such as Hisense, Zhigao, and Aux, while international brands like Samsung, Panasonic, Daikin, and Mitsubishi constitute important participants in the high-end market.
Market research data shows that although some brands in the frozen food industry have significantly reduced their average product prices in 2025, their market share has not increased significantly. However, for technology products that focus on artificial intelligence and comfort and health as their core selling points, their market share has increased significantly.
This contrast in market performance reveals a fundamental shift in the competitive logic of the air conditioning industry: technological sophistication and dimensions are replacing price as the core factors determining market position.
from the inside out
In addition to the withdrawal of national subsidies, there are also some other notable issues in the industry, such as the substitution of copper with aluminum.
In recent years, the substitution of copper with aluminum has become a hot topic in the air conditioning industry. Behind this technical discussion lies the pressure of continuously rising copper prices and the reality of China's resource structure, which is rich in aluminum but poor in copper.
Since 2024, the China Household Appliances Research Institute has taken the lead in establishing a working group for research on aluminum reinforcement applications in air conditioning, issuing relevant self-discipline conventions, and promoting industry technology research and collaboration. This series of actions has brought the application of aluminum replacing copper from professional technical discussions into the public eye.
However, it should be clarified that the material composition of mass-produced air conditioning models currently available in the domestic market has not changed. Leading brands such as Midea, Haier, and Gree still maintain the configuration of pure copper tubes for key components such as condensers and evaporators.
Enterprises' participation in relevant technological research is primarily aimed at technical reserves and forward-looking layouts, which does not equate to changes in products.
Last year, the phrase "If you don't go global, you'll be left behind" was also very popular, and the air conditioning industry was no exception.
Facing the challenge of slowing domestic market growth, air conditioning enterprises have accelerated their pace of going global. In 2025, due to the impact of US tariffs, the supply chain for exports to the US continued to shift overseas, and this trend will continue in 2026.
In 2025, the exhibition area and the number of professional visitors at the China Refrigeration Exhibition reached a 38-year high, with a year-on-year increase in the number of foreign buyers. Heat pumps and cold chain equipment have become popular categories among overseas buyers, demonstrating the technological competitiveness of Chinese air conditioning enterprises in the international market.
Similarly, the expansion of air conditioning overseas has also encountered significant obstacles. Persistent regulatory and technological barriers, insufficient understanding of target market standards by enterprises, uncertainty brought about by adjustments to export tax rebate policies, as well as intensified geopolitical and trade barriers, have all posed multiple challenges to the overseas expansion of Chinese air conditioning. The industry also experienced negative export production growth for seven consecutive months starting in May last year, only to see a recent recovery due to the pre-holiday effect. Furthermore, as inventories in Europe and the United States remain high and the substitution of new overseas factories intensifies, the front-loading effect will fade, and the data for February will soon decline.
The wave of intelligence
Artificial intelligence technology is revolutionizing the interaction logic of air conditioning, and also providing a novel approach for the integration of cross-disciplinary technologies with traditional refrigeration technology.
Haier Air Conditioner's AI Eye system achieves dual-zone control of cold and hot air through the visual neural center. Midea's Air Central System builds an air ecosystem from five dimensions: temperature, humidity, wind sensation, cleanliness, and freshness.
Meanwhile, more cutting-edge technological explorations are also underway. TCL Air Conditioning has deeply integrated with the DeepSeek large model to create a smarter intelligent air conditioner, enabling free switching between offline command libraries and cloud-based large models.
These innovations have transformed air conditioning from a passive temperature regulating device into an active service system capable of understanding more complex needs.
In the traditional definition of air conditioning, it refers to cooling and heating. Nowadays, the focus of innovation for air conditioning companies is shifting from single temperature control to comprehensive healthy air management. Hisense has launched the seventh-generation bidirectional flow fresh air technology, which achieves efficient ventilation without expanding holes. TCL has introduced a drying mode for new homes to remove formaldehyde, which can be remotely activated even in environments without Wi-Fi.
In the field of energy conservation, artificial intelligence also demonstrates great potential. Changhong's AI cloud energy-saving technology relies on AI recognition models and decision-making centers to autonomously and intelligently adjust operating frequencies through learning and analyzing user habits. The domestic R&D director of Midea Air Conditioning pointed out that AI will become a key technology to break the bottleneck of energy efficiency.
The competition in the air conditioning industry in 2026 has transcended the traditional price war and is evolving into a comprehensive contest of strength centered around technology and ecosystem.
Market research indicates that consumers are increasingly willing to pay a premium for innovative technology products that meet their needs. This shift in consumer trends is reshaping the research and development priorities and marketing strategies of the air conditioning industry.
Industry technological breakthroughs are not only evident in the field of household air conditioning. Industrial high-temperature heat pump technology has successfully elevated the heat pump water outlet temperature to 99℃ through collaborative innovation involving ultra-efficient centrifugal compressor technology, adaptation of new environmentally friendly refrigerants, and intelligent temperature control systems.
The transformation of the industry from "Made in China" to "Intelligent Manufacturing in China" has moved beyond the slogan stage. Those enterprises that have successfully transformed innovative technology into consumer-perceived value are quietly building their own moats in the new round of industry reshuffle. However, amidst the tumultuous waves, some companies may silently fall behind. How to break through the encirclement in the midst of real major changes will be a historical proposition that both large and small participants in the entire HVAC industry need to face together.
