Power Shift in the Global Refrigeration Industry Chain – From Product Going Global to Rule-Setting

The refrigeration industry sits in the "mid-tier" of manufacturing – neither as geopolitically constrained as chips or lithography, nor as purely scale-driven as textiles or furniture. For precisely this reason, the internationalisation path of this industry best reflects the subtle transition of Chinese manufacturing from quantitative to qualitative change.

However, when people speak of China’s refrigeration industry, the first associations are household air conditioners and refrigerators – the white-goods narrative is so strong that "refrigeration" is almost equated with "home appliances." But what truly reveals the industry’s underlying texture is often the less publicised commercial refrigerated cabinet: its customers are not consumers but supermarket chains and beverage brands; its logic is not brand premium but customised solutions; its growth does not depend on household replacement cycles but on retailformat expansion. Only by placing white goods and commercial cabinets side by side can one assemble a complete industry map.

Over the past two decades, Chinese refrigeration companies’ global value roles have undergone three logical shifts. The first two were natural extensions of scale; the third touches the most sensitive nerve of the industry chain – the right to define.

I. Three Logical Shifts

Phase 1: Cost Arbitrage and Passive Integration (2001–2010)

The golden decade after WTO accession was essentially the flattening of global refrigeration costs by China’s manufacturing dividend. At that time, Chinese companies’ core competence was not technology, but "turning a BOM on a drawing into a physical product at 30% below global cost." The industrial clusters in Qingdao and Foshan served as "world assembly workshops" – household air-conditioners under OEM labels, refrigerator kits exported for assembly; foreign brands moved production to China, and the labour-and-land differential per unit was enough to cover ocean freight.

During the same period, commercial refrigerated cabinets started in much the same way, but with different export customers. The initial overseas orders for Xingxing and Hiron were not for end-consumers, but display and beverage cabinets for B-to-B clients like Coca-Cola and 7-Eleven. White-goods OEM customers were mass retailers; commercial-cabinet OEM customers were multinational brand headquarters procurement – with stricter quality standards, more customisation requirements, but equally price-sensitive. This difference was not obvious then, but it laid a latent thread: commercial-cabinet companies were from the start forced to understand customers’ "business scenarios" not just "product specifications" – a capability that could not grow in household-OEM factories.

In hindsight, that decade was about earning a "physical spread," not a "value premium." The centres of power in the global industry chain – Japanese materials, European compressors, US energy-efficiency systems – remained untouched; China was simply the long, stable assembly line.

Phase 2: Capacity Spillover and Tariff Immunity (2011–2020)

2011 was an underestimated watershed. Haier’s acquisition of Sanyo’s Southeast Asian white-goods business was notable, but even more telling was that domestic comprehensive cost curves and overseas trade-barrier curves intersected that year.

This round of capacity relocation was motivated by something far more pragmatic than "internationalisation" – it was about avoiding the country-of-origin trap. As tariffs on Chinese refrigeration finished goods increased, moving factories to Vietnam, Thailand, and Indonesia was fundamentally about using physical relocation of supply chains to gain tariff exemptions. Midea built 21 production bases in Southeast Asia; Haier acquired mature brands in Asia and the Americas – each choosing different paths.

Commercial-cabinet companies moved more quietly but just as resolutely. Xingxing started its Thailand overseas production base in 2019, with an initial annual capacity of 80,000 units, targeting Southeast Asia’s rapidly expanding convenience-store economy and beverage-distribution networks. Hiron’s Indonesia plant, with planned annual capacity of 500,000 units, was backed by overseas revenue of RMB 530 million in the first half of 2025, up 9.4% year-on-year, mainly driven by Southeast Asia. Haier also broke ground on an Indonesia freezer base in late 2025, with planned annual capacity of 1 million units, covering freezers and commercial display cabinets.

These investments share a common feature: location follows customers. Xingxing’s first major customer for the Thailand line was a Japanese convenience-store chain expanding in Southeast Asia; Hiron’s Indonesia plant serves fast-growing local supermarket chains and beverage bottlers. This differs from the white-goods logic of "build a factory, then find channels"; commercial-cabinet expansion essentially tracks customers’ commercial growth, with higher order certainty but far more demanding local service capabilities.

Still, the substantial rise in overseas revenue share – Midea ~42%, Haier ~51% – still contains a considerable portion of OEM and contract manufacturing; brand premium has not kept pace with the capacity footprint. This is also true in commercial cabinets, but with a difference: a substantial part of Hiron and Xingxing’s overseas business remains ODM rather than OBM; but because they do not rely on consumer brand awareness, B-to-B customers value delivery capability and quality consistency, so "white-labelling" does not compress margins as severely as in home appliances.

Phase 3: Standards Shadow-War and Rule-Breaking (2025 – a landmark case)

In 2025, Gree, together with Hefei General Machinery Research Institute, released two ISO compressor standards – the first time in nearly two decades that China’s refrigeration industry has truly stepped onto the rules table.

Why "compressors" rather than "finished appliances"? Finished-appliance energy-efficiency standards are directly linked to national labelling regimes – AHRI in the US, ErP in Europe – which are regulatory territories. Compressors are industrial intermediates, where technical logic trumps political logic and trade attributes are more neutral; this is where breakthrough resistance is smallest. Moreover, once compressor standards are established, they cascade down to finished products, influencing both household and commercial segments – a significant leverage effect.

The more interesting question: why did four similar proposals from the UK, Germany, and China between 2009 and 2015 fail, yet this one succeeded? Past failures were attributed to opposition votes or insufficient expert input, but the real issue was that developed countries were unwilling to compromise on test conditions and reference temperatures – for example, T1 conditions suit temperate zones, but large parts of China and Southeast Asia operate under T3 tropical conditions. This time, Chinese proposals passed with high votes, driven by several undercurrents. The explosive growth of China’s new-energy vehicles has fed back massive real-world data for thermal management (heat pumps, inverter control); in some dimensions, the actual operating data China possesses exceeds the accumulated data in Western laboratories, making it increasingly hard for Western experts to dismiss. The RCEP standard-coordination mechanisms and the growing activity of Belt-and-Road countries in ISO provided voting support for compromise solutions. Another easily overlooked strategy: China focused only on "performance evaluation," deliberately avoiding sensitive areas like "safety requirements" and "restrictions on environmentally-friendly refrigerants" – compromising on secondary battlefields to win on the main front, a sign of mature negotiators.

What role do commercial cabinets play in this game? Although the two compressor standards are general, commercial scenarios impose far more stringent reliability demands on compressors than household use – convenience-store display cabinets start and stop dozens of times a day, beverage cabinets run continuously in outdoor high temperatures, supermarket display cabinets’ operating stability directly affects fresh-food waste. It is precisely these extreme-condition operating data that provided argumentation materials in standard discussions that household scenarios could not offer. Commercial cabinets’ "high requirements" thus became a card for Chinese enterprises at the standards table.

Of course, this is still only a single case. One company leading two standards does not mean the entire industry has completed a "standards-export" leap. But the real value of this case is that it disproves the old narrative that "China can only implement standards" – turning the question from "can it?" to "how long until it covers more sub-sectors?" That is a qualitative difference.

II. The Real Coordinates: Scale, Structure, and Hidden Breaks

Many analyses like to summarise China’s refrigeration industry as "largest scale, but still with gaps" – accurate, but nearly zero information. What is truly worth dissecting lies beneath the data.

In 2025, China’s refrigeration finished-product output remained the world’s largest, valid for both household and commercial segments. Commercial cabinets are substantial – domestic sales of 9.177 million units, up 10.4% year-on-year; light commercial refrigeration equipment annual sales of 18 million units, revenue RMB 36 billion; the commercial refrigerated display cabinet market grew from RMB 16.2 billion in 2020 to over RMB 29 billion, with a CAGR of 12.35%. This is not a marginal segment.

But "scale first" hides internal divergences. Growth in 2025 was not uniform: remote refrigerated display cabinets led with 30.2% year-on-year growth; beverage cabinets, vending machines, car refrigerators, and other categories all grew over 10%. Growth drivers came from supermarket remodelling, discount-retail expansion, and rising share of cold-chain-dependent categories like fresh and prepared foods – consumer-side business-format changes are pushing equipment upgrades. This "demand-driven supply" logic gives commercial-cabinet companies a growth base that white goods lack: less dependent on property cycles, more aligned with retail-infrastructure expansion – more stable and more predictable.

On competitive landscape, commercial-cabinet concentration is rising sharply. In supermarket/convenience-store scenarios, the TOP5 in remote display cabinets hold 80.3% share. Aucma, Xingxing, Hiron, Midea, Haier, and Hisense together account for 79.3% of the total commercial-cabinet market, while six brands including Beichuan and Bingxiong were phased out due to energy-efficiency non-compliance. The shake-out is faster than many expect.

Within this landscape, two companies’ paths are worth separate attention, precisely because they represent two different answers to the question "where to go after scale is achieved."

Xingxing started with household freezers and proactively moved into commercial cabinets as industry competition intensified. The logic was straightforward: household freezers compete on channel and price; commercial cabinets compete on customisation capability and solution-oriented delivery – the former is a red ocean, the latter has higher barriers but thicker margins. In 2025, Xingxing’s domestic commercial-cabinet market share reached 34%, with sales exceeding RMB 6 billion. Its core competence is not brand strength, but "full-category commercial cabinet production capability" and "customised service that intervenes from the store-planning stage." This ability to deliver scenario-adapted solutions rather than standard products is not easily grown in the DNA of white-goods companies.

Hiron took a different path – not chasing size, but deepening focus. In the niche of convenience-store four-glass-door cabinets, Hiron holds 50.3% market share. In 2025, revenue reached RMB 3.351 billion, up 18.38% year-on-year. Its strategy is disciplined: refrigerated cabinets and smart vending machines as growth areas; actively shrinking low-margin traditional cold cabinets – even if it means cutting volume to protect profit. This "less is more" approach is almost unthinkable in household appliances, but is common in commercial segments and a sign of industrial maturity.

However, underneath these numbers that paint a "strong picture," there is a truly concerning break line.

The overseas-revenue gap among the top three white-goods players – Midea ~42%, Haier ~51%, Gree ~16% – is often used to judge superiority, but looking closely, they are not the same game. Haier’s 51% came from buying established brands like GE Appliances and Fisher & Paykel – brand assets clearly owned, highest quality. Midea’s 42% includes a significant portion of OEM shipments to overseas retailers, with net margins far lower than domestic branded sales. Gree’s 16% is low precisely because it has long insisted on own-brand high-premium exports, pricing against Daikin and Hitachi in Brazil and the Middle East. Each path has its own ledger; none is obviously superior.

Commercial-cabinet export data provide a finer reference – in 2025, China exported 7.3412 million refrigerated/frozen display cabinets, up 16.26% year-on-year, with export value RMB 15.827 billion, up 9.91%. Xingxing’s export business is about USD 50 million, and its export profit margin is higher than domestic – rare in manufacturing, indicating B-to-B customers’ willingness to pay for quality exceeds C-end consumers. But the share of own-brand in these exports remains relatively low; at international commercial refrigeration exhibitions, European buyers are still more familiar with names like Epta and AHT.

More critically, whether household or commercial, whatever export path, the entire industry shares the same hidden break: high-end scroll compressors – the heart of inverter centrifugal chillers, and the ultra-quiet, high-reliability compressor units needed for commercial display cabinets – remain heavily dependent on imports from Japan and Europe. If Chinese companies promise a COP value in a standard they lead, but the core component to achieve that value must be sourced from Kobe Steel or Bitzer, then that standard becomes someone else’s moat. Commercial scenarios expose this break even more starkly than household: convenience-store display cabinets starting and stopping dozens of times a day, outdoor beverage cabinets running at 40°C – the reliability and efficiency degradation of domestic compressors under these conditions is a pain point known to OEMs but rarely discussed in public reports.

We have nothing to say about cabinet assembly, but the micron-level tolerances on compressor impellers and the fractional-degree drift in temperature-control modules – that is the real choke point.

III. Trend Projection: The Battle After Rule-Setting

Standards release is not the end. It is more like a starting pistol; the real contest on interests has only begun.

First, the standard-setting suction effect. Once ISO 18501 and 18483 become procurement references in international trade, global buyers will prefer suppliers that can meet the new standards at the lowest cost. Whoever adapts fastest to the test methods and mass-produces compliant models first will capture the standard dividend. Gree currently holds first-mover advantage, but Midea and Haier will not stand by – one possible route is they join with foreign compressor brands to set up plants in China, using joint ventures to neutralise Gree’s standard barrier. Commercial cabinets will also be affected: if display-cabinet energy test methods change due to compressor-standard shifts, whoever among Hiron, Xingxing, and Aucma can first launch a full compliant product line will gain an edge in the next round of supermarket-equipment bulk procurement.

Second, testing and certification. Standards specify "how to measure," but "which instruments to use" and "who calibrates" are more hidden power zones beyond the standard text. High-precision sensors and calibration technology for test benches have long been held by Swiss Kistler and Japanese Kyowa. If the standard text China issues still requires sending samples to TÜV Rheinland in Germany for certification, the standard’s real weight is diminished. The real indicator over the next five years is not how many new standards are published, but whether China can build an internationally-recognised testing and certification system to match – that is the physical carrier of standards influence.

Long-term, the industry will see visible path divergence. There will no longer be just one "champion," but a natural split into several roles: some deeply involved in rule-definition, embedding patents in standard clauses; others continuing as global OEMs with extreme cost and scale – thin margins but enormous volume; some focusing on choked components like compressors, valves, sensors, capturing the import-substitution window; others making customised finished cabinets for tropical, polar, convenience-store-dense, and other specialised scenarios, establishing local dominance in niche markets.

The divergence between household white goods and commercial cabinets is itself a precursor. Household needs brand, channel, scale – Midea, Haier, Gree’s home turf. Commercial needs customisation capability, solution delivery, understanding of customer business scenarios – the home turf of less-famous but healthy companies like Xingxing and Hiron. Both share refrigeration technology, but competition logics are completely different. True industrial maturity is when players stop crowding into the same lane to compete on price, and instead build barriers in their respective areas that are hard for others to cross.

Scale leadership is accumulation of quantity; standards participation is the sprouting of momentum; but self-reliance in core components is the qualitative tipping point. The two standards of 2025 prove that Chinese companies can pull up a chair at the rule-making table. But once seated, whether they speak with chips supplied by others or with their own real assets – that is a question the industry will need a decade to answer. And the first page of that answer is written in the micron-level tolerances of compressor impellers.