Dowgecn.com report Home Appliances a Tough Sell in the Countryside of china
A brand-new color TV set stands in Shi Yunguo’s house. “The set cost me RMB 1,350, and the government gave me an RMB 175 subsidy,” said Shi Yunguo, a farmer in Linyi, Shandong Province. Beginning in February 2009, Chinese farmers qualify for a 13 percent government subsidy on TV, mobile phone, refrigerator and washing machine purchases.
The “Home Electrical Appliances to Rural Areas” policy runs for four years, during which 480 million household electrical appliances are expected to sell in the countryside, generating consumption worth RMB 920 billion. “The government wants to stimulate consumption in rural areas and simultaneously clear surplus home electrical appliances,” said Zeng Xiao’an, vice director of the Ministry of Finance’s Department of Economic Development.
Home Electrical Appliances Affordable to Farmers
The “Home Electrical Appliances to Rural Areas” scheme has been operating on an experimental basis for one year. Subsidies have been allocated to farmers in the provinces of Shandong, Henan and Sichuan since December 2007, and 3.5 million home appliance sales have been made in these provinces since the end of October 2008, according to Ministry of Finance statistics.
Shi Yunguo was just one of the farmers who bought their TV sets under the scheme.
The Chinese government has invited tenders for the contract to produce the appliances in accordance with related regulations. No single item is to exceed RMB 2,500 in price.
China is now the world’s largest home electrical appliance producer. The export volume of color TVs, refrigerators, washing machines and mobile phones in 2007 reached US $57.9 billion, and constitutes a main source of China’s large trade surplus.
Export growth has made great contributions to China’s economic development in the past decades, but is dwindling under the current economic crisis. Popularizing home electrical appliances in rural areas, however, offsets the falling export volume, according to Zeng Xiao’an. But this means nothing to 54-year-old Shi Yunguo, who lives in a remote mountainous area, and whose two sons have gone to the city to do manual labor, nowadays a main source of income for rural dwellers.
Shi Yunguo remembers how 20 years ago there was only one Hitachi television in the whole village. “We had to borrow heavily to buy a television at that time,” he recalls. China’s first color TV production line was set up in 1978. Until 1994, Japanese brands had the lion’s share of the Chinese television market, but sets are scarce in rural areas.
Getting married is a grand affair in rural areas. Shi Yunguo bought his first color TV in 1992 as a wedding gift to his eldest son.
There are 900 million rural residents of China whose lifestyle does not match that to be expected of such a rapidly developing economy. Home electrical appliances are hence far less common in the countryside than in the city. A State Statistics Bureau survey shows that more than 200 million rural families would need to buy 168 million TV sets over the next ten years to equal the 1996 urban rate of popularization.
The huge market potential of China’s rural areas has focused the attention of both domestic and overseas home electrical appliance companies. Haier produces wider voltage water-proof TV sets to meet the demands of rural consumers, and Siemens has also invested heavily in promoting its products in the countryside. Companies that win the rural market will be the market leaders of the future, according to vice director of China Home Electrical Appliance Association Jiang Feng.
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