Shanghai, November 14, 2014 - “Cold chain will become a focus of the Chinese government, and more investment will enter this field in the future,” said Ram Krishnan, President of Emerson Climate Technologies for Asia and the Middle East. He believes that cold chain development is an urgent task; not only does China wastes 20% to 30% of its food each year, but also because the food sector is enhancing quality management, both of which rely on a strong cold chain system.
As the forerunner of the cold chain sector, Emerson Climate Technologies is an important brand under Emerson. It has been growing 18% annually in China’s cold chain market, making it a key contributor to the success of its parent company, Emerson. In the fiscal year 2014, Emerson recorded net sales of $24.5bn and posted positive growth in dividend per share for the 58th straight year.
Ram Krishnan believes that the driving force behind the cold chain sector are the enactments of the 12th Five-Year Plan and the upcoming 13th Five-Year Plan by the Chinese government, both of which regard cold chain development as the key area for investment in the future. In the past few years, China has developed 29 million refrigerating infrastructure facilities, strengthening their understanding of warehousing and logistics of refrigerators. “We believe the Chinese market will grow 10% to 15% in the coming years,” said Ram Krishnan.
Responsibility of retailers
Emerson found that “food retailers have begun to pay close attention to food safety, such as storage and transportation of refrigerated food, as the monitoring responsibility of keeping food fresh has shifted to retailers.” On November 6, Emerson Climate Technologies published a research report on China’s cold chain sector, titled Enhance Food Safety with Less Cost.
The report said that food safety remains the biggest concern of Chinese consumers. A growing number of consumers will buy refrigerated fresh food from supermarkets but they believe the suppliers and retailers should be responsible for food safety, not shift cost to consumers.
In fact, food retailers also want to reduce the damage of food, in order to maintain profit. The report takes DIA% as an example. DIA% adopts Emerson’s integrated intelligent facility management system in 22 stores in Shanghai, which can monitor and optimize energy consumption in the stores and ensure the refrigerating systems at a proper temperature to keep food fresh. System administrators can learn and respond to any problems on a real-time basis, so as to ensure the freshness and safety of food, reduce waste and cut maintenance cost.
After implementing the solution, on average, each DIA% store saw energy savings of 24%, which translates into savings of RMB 22,000 of operating expense each year, with an investment payback period of one to two years.
According to Ram Krishnan, China’s fresh food market, such as vegetables, dairy products and medical products, relies on a well-functioning logistics system. The cold chain logistics market is huge with strong policy support.
He said that Emerson Climate Technologies has been developing adaptation technologies and solutions to help retailers monitor food safety and quality by using sensors, temperature control devices and temperature management instruments. For refrigerator trucks and transport facilities, the technologies can ensure stable operation of the machines over a long period without frequent down time, avoiding major economic loss. Some electronic components and monitoring devices can also realize remote monitoring and management of the whole cold chain and improve efficiency by reducing energy consumption.
“We aim to significantly mitigate the serious food waste issue in China in the next three years. I’ve mentioned that 30% of food has been wasted. We hope the waste can be reduced by half three years from now. This is a very important indicator for us,” said Ram Krishnan. Emerson Climate Technologies will strengthen cooperation with food retailers and the Chinese government to improve food safety in China and increase food companies’ competitiveness.
“China is the second largest market after the US for Emerson, and it is the most challenging one in terms of size, complexity and geographic scope,” said Ram Krishnan. “It requires close communication with end users, OEM, dealers and partners in different regions to build strong infrastructure in the market and grow business.”
Emerson Climate Technologies has placed high hopes on Chinese market. In the future, the company will improve R&D, product delivery and distribution capabilities and strengthen marketing and education for clients, OEM, wholesalers, dealers, and end users.
Meanwhile, the company has been closely following two consumption trends and behavior patterns in the Chinese market, which are traditional stores and e-commerce, to see which trend will prevail. In addition to convenience stores and supermarkets, Emerson Climate Technologies will build large warehousing facilities to deliver products directly to consumers with the support of a flexible and convenient logistics system.
Emerson Climate Technologies will focus on exhibition, purchase and logistics in the area of storage facilities, such as large refrigerators. The company believes e-commerce will redefine the existing business landscape. China’s cold chain warehousing capacity has reached 29million cbm, with 91,000 refrigerator trucks and refrigerating cabinets and warehouses.
“Our focus is how to maintain our leading position in the market, effectively execute our expansion plans and reduce China’s serious food waste, food regulation and food quality issues,” said Ram Krishnan.
Emerson Climate Technologies built its name with its residential air conditioning solutions when it first entered the Chinese market. With business expansion, it now provides diversified cooling and heating solutions for commercial and residential buildings.
About Emerson Climate Technologies
Emerson Climate Technologies, a business segment of Emerson, is the world’s leading provider of heating, air conditioning and refrigeration solutions for residential, industrial and commercial applications. The group combines best-in-class technology with proven engineering, design, distribution, educational and monitoring services to provide customized, integrated climate-control solutions for customers worldwide. The innovative solutions of Emerson Climate Technologies, which include industry-leading brands such as Copeland Scroll™ and White-Rodgers™, improve human comfort, safeguard food and protect the environment. For more information, visit www.EmersonClimate.com.
Emerson (NYSE: EMR), based in St. Louis, Missouri (USA), is a global leader in bringing technology and engineering together to provide innovative solutions for customers in industrial, commercial, and consumer markets around the world. The company is comprised of five business segments: Process Management, Industrial Automation, Network Power, Climate Technologies, and Commercial & Residential Solutions. Sales in fiscal 2014 were $24.5 billion. For more information, visit Emerson.com.