Europe’s Heat Pump Lobby Wants to Lure Chinese Factories to Europe

The head of the European Heat Pump Association is calling on Chinese companies to manufacture, invest and hire in Europe – while warning against Trump-style trade barriers.

Europe’s heat pump market is still firmly in European hands – unlike the market for air conditioners. According to a survey among members of the industry body EHPA, around ten percent of the heat pumps installed in Europe come from China, while more than 80 percent are assembled in Europe itself. For monobloc units, the share assembled in Europe is above 80 percent, and for indoor units it exceeds 90 percent; only for outdoor units does the figure drop to roughly half. By comparison: in air conditioning, the three Chinese groups Haier, Gree and Midea together already account for around 32 percent of the European market by retail volume, according to Euromonitor – and none of the five best-selling AC brands in Europe is EU-owned. The heat pump market itself is growing again: around 2.9 million units were sold across 21 European countries in 2025, up 13 percent, bringing the total installed base to roughly 29.3 million.

It is precisely this balance of power that Paul Kenny, Director General of the European Heat Pump Association (EHPA), wants to preserve – without letting it turn into a trade conflict. In his keynote at the China Heat Pump Forum on 30 July, he lays out a clear proposed deal for the Chinese industry.

“Manufacture in Europe, invest in Europe”

Kenny’s central demand of Chinese heat pump makers is localisation: collaborate with European companies, manufacture in Europe, invest in Europe. That, he argues, is exactly what China has asked of European firms. “We have learned from you,” Kenny tells his hosts.

His role models are Chinese companies themselves. Midea, he notes, runs a European headquarters in Germany, manufactures in Europe, trains installers there and is active in European trade bodies. Haier is doing the same “very successfully”. Brands such as Panasonic, Mitsubishi and Daikin have shown how it works: factories in Europe, local jobs, broad acceptance.

The reason lies in the nature of the product, Kenny says: “A heat pump is not a smart phone.” It has to be chosen with specialist advice, installed properly and serviced, and done right it lasts 20 years or more. Without local market knowledge and local staff, he argues, no one gets far in Europe – “no matter how good and how affordable your product is”.

Concretely, Kenny urges Chinese suppliers to join the EHPA and national heat pump associations, support market growth and train installers.

The Industrial Accelerator Act as a “differently shaped door”

The political backdrop is the European Commission’s proposed Industrial Accelerator Act, designed to ensure that European public subsidies for clean tech are reinvested in Europe. For heat pumps, Kenny explains, that means subsidised units will have to be “of European origin” – at least 45 percent of the value of the finished product as it leaves the factory must contribute to the European economy.

China should not read this as a new wall, he argues, but as “a differently shaped door” into the European market. And European legislators will keep putting up such doors as long as they see their own industry threatened by what is perceived as unfair competition. The key, he says, is collaboration – and it is in Chinese companies’ own interest, to head off further trade restrictions.

Warning against Trump-style tariffs

At the same time, Kenny draws a sharp line against protectionism. Populist and far-right politicians, he says, are taking genuine fears about shuttered factories and job losses and pinning them entirely on China – spinning that into a narrative in which supporting clean tech and renewables is anti-European and unpatriotic. That hurts the heat pump industry and is based on lies, according to Kenny. Stricter trade rules to protect European jobs he considers fair and reasonable; the Trump-style trade barriers advocated by right-wing populist forces, by contrast, are “clearly a terrible idea”.

Kenny also points to the European upside of Chinese innovation: competitive technologies such as car batteries exist in part because Chinese demand created the scale that allowed companies to innovate. As counter-examples he cites shipbuilding and solar – industries Europe once led that have since moved to China. That experience, he says, is what has created fear in Europe.