Yoshifumi Fukuzawa 
Daikin Industries logo
In 2025, the name of the Astros' home ballpark in Houston, Texas, will change from Minute Maid Park to Daikin Park. Daikin Comfort Technologies North America became the first Japanese company to win the naming rights to an MLB stadium. You may be wondering what Daikin is. Daikin is now the world's leading Japanese manufacturer of air conditioning equipment, with projected net sales of ¥4,770 billion JPY (approximately $33.3 billion USD) for the year ending March 31, 2025.
In the past, Japan was represented by companies such as Panasonic and Canon. The names of these companies symbolized the economic strength of Japan. Recently, however, in the United States, Japan is no longer represented by corporate brand names but by the Los Angeles Dodgers' superstar, Shohei Ohtani.
I have long hoped that Japanese product brands would be revived as symbols of Japan rather than relying solely on athletes. During my recent visit to Turkey, the names of Toyota, Nissan, and Panasonic, once synonymous with Japan, were unfortunately on the verge of being forgotten there as well. However, some locals mentioned one particular thriving Japanese company — Daikin.
Legacy in Decline
It has been a long time since the momentum of Japan's once-great corporations began to wane. Nissan, which was second only to Toyota in Japan, has not performed well. There were even talks of a merger with Honda, but those talks were canceled.
Panasonic is planning a major reorganization. Toshiba has already been dismantled, and its brand is no longer even produced by the company itself. REGZA, once Toshiba's TV brand, is now owned by a Chinese company.
In Japan, a shrinking and aging population, low number of births, and rising prices have left the average consumer worried about the future. However, the Nikkei average has been rising steadily, buoyed by the rising stock prices of major companies.
Some may wonder why stocks are rising while the Japanese economy does not seem to be booming. This is because companies are doing well overseas, and their profits are being invested locally rather than returned to Japan.
As a result, the figure appears in Japan's balance of payments as the income balance, which has been steadily rising. In other words, there are some Japanese companies that are doing well overseas and generating high profits, even if they are doing poorly in Japan.
Powered by AC
Daikin, a leading manufacturer of air conditioners that have become essential to modern living, is one such company. The air conditioning sector accounts for 90% of the company's mainline business, with fluorochemicals making up the remaining 10%. It holds the top domestic market share for commercial and residential air conditioners, at 40% and 18.7%, respectively. The company is also well-regarded not only for its products but for its after-sales service, which remains ahead of the competition.
Recently, I decided to replace my 17-year-old Toshiba air conditioner (not that it broke down). So I asked around and found that Daikin was the best choice.
Daikin's overseas sales ratio is 83%. This is significantly higher than the overseas sales ratios of Sony (77%), Toyota (75%), and Panasonic (60%). The company has the top share of the overall global market for air conditioners at 13.35% (as of December 2023).
When narrowed down to commercial air conditioners, the company's air conditioners account for 40-50% in most major regions of the world. Today, the main market for Daikin air conditioners lies overseas, as Japan's economy shrinks due to population decline. The company now operates 125 production sites across more than 50 countries — including China, Southeast Asia (Thailand, Vietnam), Europe (Czech Republic, Belgium), and the US. It maintains a sales network spanning 175 sites in 150 countries.
Cracking Emerging Markets
A Harvard Business Review report titled How to Win in Emerging Markets: Lessons from Japan (May 2012), cited in Made in Japan: What Went Wrong? (Japan Forward, January 16, 2025), explains how Japanese companies lost ground in emerging markets to latecomers like South Korea.
In this report, Daikin, along with Unicharm, is presented as an exceptionally successful and fast-growing company in emerging markets. Daikin has successfully overcome the factors considered as the main causes of failure for Japanese companies in emerging markets. These include:
- Distaste for the Middle and Low-End Segments
- Aversion to M&A
- Lack of Investment Commitment
- Lack of Talent
In 1996, Daikin began local production in China. After initially focusing on the B2B market, the company first entered the high-end market to build its brand name before entering the mass market. Daikin now covers the whole of China by implementing a tiered market strategy. It introduces high-value-added models with smart home appliance integration functions in urban areas, durability-oriented models in provincial cities, and simple installation models for easy installation in rural areas.
As a result, the company's market share in China has reached 25%. And we must not forget about after-sales service. Daikin also offers 24-hour service to customers in China, with guaranteed arrival within two hours in major cities. In India — where Korean companies such as LG and Samsung had a strong foothold — Daikin targeted two major cities, along with two dozen small and medium-sized ones. They challenged the Koreans with their products in the low price range.
Daikin's acquisition of OYL in Malaysia for $ 2.1 billion in 2006 also led to the expansion of its business globally.
Localization as Strategy
In terms of R&D investment and human resource development, Daikin has followed a strategy different from that of other Japanese companies. It has established R&D centers in China and India to develop products that meet local needs.
In human resource development, the company was an early adopter of localization, appointing local executives and entrusting them with product development, sales, and management. As a result, 80% of the company's Asian bases are now managed by locals. This further promotes speedy management.
With a declining population, domestic consumption will fall further in the future. If this happens, companies' domestic sales will also decline. Inevitably, for Japanese companies to grow, the only future market for them is overseas.
A Blueprint for Growth
Daikin has taken a different approach from other companies, avoiding the risk of concentration in certain countries. Instead, it has expanded its business across Asia, Europe, and the Americas while continuing to provide high-quality products to consumers around the world.
The company seems undeterred by the emergence of leaders such as Donald Trump in the US, whose policies led to higher tariffs and blocked imports. Daikin's strategy and breakthrough should serve as a source of reflection for the companies that have failed to internationalize and a guideline for the future.
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Author: Yoshifumi Fukuzawa
