(DAIKIN X WSJ) World Shakers article PICS
December 12, 2019
Ninety-five years on and Daikin is still blowing away the competition while bringing dignified and respectful living to millions.

Founded in 1924 in Osaka Prefecture, Daikin Industries has grown from a Japanese company to a global industry leader in the field of HVAC (heating, ventilation, air conditioning) and refrigerants.
After opening its first air conditioning factory in Sakai, in southern Osaka, Daikin’s story is one of constant innovation and hands-on practicality, with an organizational model that stresses a close relationship between its dealerships and dedicated employees—the joint human resources that are the beating heart of Daikin’s corporate identity.

Yoshihiro Mineno
Senior Executive Officer, Daikin
“Innovation is our lifeblood”

“We started small, especially when you compare us to our competitors—well-known conglomerates with massive resources and other home electronics and appliances,” says Senior Executive Officer Yoshihiro Mineno. “And we’ve been able to turn this to our great advantage.”

The ability to innovate, and to do so at speed, has been key to the company’s story. “Because we are an AC specialist, we invest all of our resources into developing AC technology,” says Mr. Mineno. The company was the first in Japan to develop fluorocarbon refrigerant, which, by 1951, they’d put to use in Japan’s first-ever packaged air conditioning unit.

Today as it celebrates its 95th anniversary, Daikin has more than 100 global production and sales bases, operates in more than 150 countries, and has over 76,000 employees. In addition, its global sales, currently in excess of $22.4 billion, have seen year-on-year growth for nearly a decade now.

Yet its history wasn’t all plain sailing. “The summer of 1994 was unusually cool, and Japan faced negative growth,” says Mr. Mineno. “We felt that, practically, we had no option but to focus on investing overseas. It was counter-intuitive in some senses, but it worked.”

Because the international marketplace for air conditioners at the time was still undeveloped with very few dealers, Daikin shifted its organization model. By approaching salespersons from a range of different industries, it was able to strengthen how it worked through local dealerships.

“We went to local communities and persuaded locals to become dealers. Overseas, a lot of plumbers who understood the system became air conditioning agents, the international counterparts to the rice salesmen we had first begun recruiting here in Japan. We also saw bicycle shop owners signing up. We educated them about our products and they gave us valuable insights into customers’ needs, which in turn allowed us to quickly innovate and design new products,” says Mr. Mineno. “It’s still our greatest advantage compared to our rivals, who took a less diverse, more single-stream approach; they couldn’t match us.”

In addition to its close relationship with local dealers across the globe, Daikin’s growth continued through key acquisitions in Malaysia (O.Y.L Industries in 2007), Germany (Rotex Heating Systems in 2008), the U.S. (Goodman Global Group in 2012), Italy (Zanotti in 2016) and Austria (AHT in 2019). These new channels allowed the company to expand its international sales, product portfolio and peripheral offerings, which in turn propelled Daikin’s success, allowing it to reach Global #1.

As Daikin looks toward its 100th anniversary in 2024, it strives to stay true to its core values and markets, while continuing to diversify through strategic alliances and acquisitions and mergers. The service and solutions sector is seen as another key frontier. “Technology will be key as we develop cloud-based systems to control air conditioner systems in large building complexes,” says Mr. Mineno, adding that big developments are on the horizon.

“Innovation is our lifeblood,” he says with a smile. “We started small, and compared to the corporate giants, our body may still be small, but we have long arms and strong legs! The Japanese word for ‘the world’ is sekai. We’ve expanded our business from ‘Sakai’ to ‘sekai’, and we’re still fighting.”

Number one Down Under

Today, Daikin’s global expansion continues apace. Australia is one of its most dynamic markets for nearly 50 years and counting. Here, the story has evolved to showcase a globally adaptive company that responds to local needs with local solutions.

In the case of Australia, Managing Director Shoji ‘Shaun’ Uehara stresses the increasing role that services and solutions will play in the company’s value proposition moving forward, and observes that the company’s swift application of product design, based on feedback from its local dealerships, is a supremely successful template that works far beyond Japanese shores.