China's Rural Appliance Program Sees Weak Support
Guangzhou Daily, 9/18/12
China's Ministry of Industry and Information Technology (MIIT) announced today that it was still considering whether or not it would extend subsidies for rural appliance sales when they expire in January 2013. Representatives from Chinese appliance manufacturers Haier, Hisense (600060.SH), and Midea all took part in a meeting today with the MIIT to discuss the matter.
According to an industry insider, only a small number of manufacturers present at the meeting supported an extension of the subsidies, believing that the subsides had accomplished their goal and an extension would have little effect. China's appliance sales are currently being affected by controls in the real estate market. With demand for appliances low, the subsidy program will struggle to impact sales. In addition, subsidies for rural residents are complicated and difficult to obtain, creating hassles for both consumers and retailers. One manufacturing representative at the meeting noted that programs or subsidies for technology upgrades were more likely to attract the interest of manufacturers rather than sales subsidies.
According to data from the Ministry of Commerce, rural appliance sales reached 7.09 mln units in August for a total value of RMB 19.33 bln, an increase of 52.4% and 58.3%, respectively.
From January to August 2012, Haier, Gree Electric (000651.SZ), and Hisense accounted for the largest proportion of total sales from the rural appliance program, with sales of RMB 16.49 bln, RMB 11.37 bln, and RMB 11.37 bln respectively. The three manufacturers accounted for 28.8% of all rural appliance sales in the period.
Editor's Note: For more background on this topic, please see "China's Jan-Aug 2012 Rural Appliance Sales Reach RMB 136 Bln" MD 9/12/12 issue.
Keywords: government initiative government subsidy home appliances Appliances to the Countryside national statistics hardware rural Ministry of Commerce Midea Haier Hisense 600060.SH Gree Electric
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