Daikin Industries is bolstering its supply chain for home air conditioners in Africa, recently setting up a manufacturing site in Nigeria while also preparing to produce products in Algeria.

The company had been expanding in Africa by importing its products from outside production hubs, but sensing widespread growth throughout the continent, Daikin is moving production there.

The manufacturing plant in Nigeria is located within the site of a reseller and receives parts from a Daikin plant in India. Engineers will also be sent from India for quality control measures.

Daikin aims to adjust its production scale based on orders from the local market, expecting to eventually sell several tens of thousands of units.

In Algeria, the company is preparing to secure a location for a manufacturing site. Once the site is set up, the company will have production bases that cover northern and central Africa.

Daikin air conditions are known for low power consumption and are considered more environmentally friendly than competitors. But the company’s share in the African market is just 2% to 3%. Air conditioner sales reached 14.3 billion yen ($96.5 million) in the fiscal year ending March 2023, making up less than 1% of the global total.

Because of the cost of importing finished products to Africa, including tariffs, Daikin struggled to compete against the likes of South Korea’s LG Electronics and China’s Gree Electric Appliances, which both have factories in the continent.

If the company successfully makes finished products for local markets, while importing relatively cheap parts from India, tariff costs are expected to decrease. This would allow Daikin to sell air conditioners for roughly $400 to $540. While that is still more expensive than Chinese brands, it presents an option for consumers who are concerned about energy efficiency and other factors.

To expand its business in Africa, Daikin has also begun training installation technicians in countries, including Kenya and Tanzania. The company is also rushing to develop cheaper products to compete in the price range where competitors are strong.

The U.N. estimates Africa’s economic growth rate at 3.5% in 2024, higher than the world average of 2.4%. While the global penetration rate for residential air conditioning is around 60%, in Africa it is around 3%.

According to the Japan Refrigeration and Air Conditioning Industry Association, the size of the African market for air conditioning was 3.6 million units in 2022, showing 10% growth compared with three years ago.