Jun. 6 - China's subsidies to energy-saving home appliances, which aim to put domestic home appliance makers at an advantage compared to the foreign brands, will help domestic technological upgrade and consolidate the industry, market insiders said Tuesday.
In an effort to boost consumption and bolster the slowing economy, the Ministry of Finance (MOF) released a new stimulus package Monday, subsidizing consumers by up to 400 yuan ($62.8) for buying energy-saving refrigerators, up to 260 yuan for highly energy-efficient washing machines, and up to 600 yuan for heat pump water heaters, based on their respective energy efficiency levels.
The new home appliance stimulus policy has been effective since Friday and will last till May 31, 2013, the MOF said in a statement.
Consumers can get discounts immediately on the purchase if they provide copies of their ID cards, and it is up to the producers to get the subsidies from the MOF, the ministry said.
"This is an extension of a series of previous stimulus measures extended to home appliance industry," said Wang Danqing, a home appliance consultant with Beijing-based Adfaith Management Consulting.
China launched similar measures as early as 2007 to promote home appliance sales in rural areas in a bid to propel consumption, but that policy is set to expire by the end of this year, and another similar incentive called "old-for-new" expired at the end of 2011.
Unlike the previous stimulus packages, the new measures offer greater amount of subsidies targeting only energy-saving products, which will not only benefit the consumers and stimulate consumption, but also encourage producers to upgrade technologies and create jobs in new energy sector, Wang told the Global Times.
As large home appliance producers have advantages in terms of energy-saving technologies, the smaller producers with outdated technologies will be eventually phased out of the market, so the subsidy policy may lead to mergers and acquisitions in this sector, he noted.
China's economy has been slowing down and facing challenges of weak external demands from the EU, its top trading partner, and the US, where economic recovery is still an uncertainty.
Gome, one of China's largest home appliance retailers, told the Global Times Tuesday that it estimated 20 to 25 percent of its sales this year will benefit from the subsidy policy.
Currently energy-saving home appliances account for about 30 percent of Gome's sales, and it aims to have more highly-efficient products, the company said.
The MOF has so far doled out subsidies for TV and air conditioner producers. Apart from domestic home appliance producers, such as Haier, Hisense and Gree, foreign brands including Sanyo, Panasonic and Samsung are also found on the incentive list.