Around 90 percent of heat pumps sold in Australia in 2023 were produced in China, the managing director of major heating company Rheem revealed.
During a Senate Committee on Feb. 21, Rheem Australia Managing Director Chris Taylor said the local heating industry was dominated by cheaper imports from China.
“Last year, 90 percent of those heat pumps were manufactured in China, whereas traditionally, the vast majority of water heaters sold in Australia were manufactured in Australia,” he told the Economics References Committee.
“It makes no sense to have them manufactured overseas, when we can do this using Australian iron or Australian steel from BlueScope, using … our own design and manufacturing teams.”
The Australian government is examining the barriers and benefits of widespread electrification of households amid the wider push towards net zero.
Meanwhile, Rheem’s managing director also noted that Australian products were at a disadvantage compared to imports that did not meet local standards.
“The only way you can deal with a competitive disadvantage is, in fact, by making products that aren’t going to serve the consumers properly,” he said.
“With a brand like Rheem … we can’t afford to be in a situation where we do the wrong thing by our consumers, and subsequently get ourselves into a competitive issue.”
While Mr. Taylor believed it was necessary to have a minimum standard for heating products, he said the standardisation process often took too long, which was detrimental for local manufacturers.
Over-Subsidising Could Squeeze Out Local Businesses
At the same time, Mr. Taylor raised concerns about the subsidy schemes implemented by state governments to encourage more people to switch to electric or solar heating products.The director said in some states, there were overlapping schemes that—if added together—would basically provide free products to customers, while ousting the local suppliers.
Using the example of a $2,000 (US$1,300) locally manufactured product and a $1,500 imported product, Mr. Taylor said that if government subsidies provided consumers with a $1,500 grant, they would need to pay nothing for the import.
The price difference could cause consumers to switch to imported products of inferior quality, flooding the market.
“It’s a very difficult and different proposition when you’re $500 versus free because when you’re free, people aren’t doing the due diligence price into what they’re buying,” he said.
Echoing the sentiment, Rheem Australia’s Ben Teeger said consumers could be susceptible to high-pressure sales tactics, or misleading advertising by unscrupulous providers when products were virtually free.
Mr. Teeger then suggested that state governments consider imposing some minimum prices that consumers need to pay when they receive subsidies to help shield them from bad business practices.
