Ten years after setting up a manufacturing facility in China to make vapour absorption systems, Thermax has decided to close down and exit the country as orders dried up.
“We were just not able to make any money in the last 10 years and even after becoming L1 in contracts when it came to awarding contracts the company never got it,” Thermax chairperson Meher Pudumjee said.
Thermax (Zhejiang) Cooling and Heating Engineering Co was a wholly-owned subsidiary of Thermax manufacturing vapour absorption system. Thermax had invested $14 million in land and machinery in the Chinese operations.
China accounted for half of the world market for these chillers and there was significant cost arbitrage of manufacturing so the company ventured into that market. But the cost arbitrage disappeared and instead reversed, Pudumjee said.
Thermax managing director & chief executive officer MS Unnikrishnan said they even tried to export from China to global markets but it did not work out. Now with the 28% tariff imposed on Chinese imports, that too was not possible, he said. The strained relationship between India and China did not help the company, he said.