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China's Home Appliance Subsidy Program for Rural Areas: Current Status and Future Impact

March 11, 2009 / Grace Chang

12 Page, Topical Report

US$2,000 (Single User License)

Abstract

In the past, the Chinese home appliance industry focused on export markets. However, as growth in European and US markets has slowed down, manufacturers have encountered a bottleneck. At the same time, after many years of economic reforms, the average income of people living in China's rural areas has gradually increased. In response to these developments, the Chinese government has initiated a rural home appliance subsidy program, in order to shift the emphasis of economic growth from exports to domestic demand, and to encourage manufacturers to design products which are suitable for rural use. The Chinese government hopes to improve the quality of farmers' lives and balance the country's urban and rural development. This report examines the development of the program, including the product types receiving subsidies and the companies which have won tenders to supply these products.

Table of Contents
1. Development Stages of the Chinese Government's Rural Home Appliance Subsidy Program

1.1 Initial Trials in Three Provinces, One City

1.2 Expansion of Program Promotion

1.3 Nationwide Implementation

2. Goals of the Rural Home Appliance Subsidy Program

2.1 Chinese Gov't Aims to Reduce Divide between Urban and Rural Areas, Accelerate Overall Economic Growth

2.2 Energy-saving Features, Design for Specific Rural Demand Essential for Developing New Markets in China

3. Impact of the Program

3.1 Insufficient Basic Infrastructure in Rural Areas to Be Obstacle for Promotion of Home Appliance Products

3.2 China's Home Appliance Industry to See Increased Concentration

3.3 PC Program Focus of Attention among Vendors

MIC Perspective

Appendix

List of Topics
Examines the development of the rural home appliance subsidy program in China until now, including products subsidized and suppliers for each product category.

Analyzes the origin of the program and the reasons to implement it

Examines the future impact of the program, as well as challenges for the promotion of home appliances in rural areas

Report appendix provides list containing all companies participating in the program, including the English and Chinese names of these companies, allowing for easy cross reference

List of Tables
Table 1 Rural Home Appliance Subsidy Program: Companies Which Won Tenders to Supply Products in the Trial Stage

Table 2 Rural Home Appliance Subsidy Program: Companies Which Won Tenders to Supply Products in the Promotion Expansion Stage

Table 3 Rural Home Appliance Subsidy Program: Companies Which Won Tenders to Supply Products in the Nationwide Implementation Stage

Table 4 Rural Home Appliance Subsidy Program: Newly Added Products by Region

Table 5 Rural Home Appliance Subsidy Program: Companies Which Won Tenders to Supply New Subsidized Products

Table 6 Overview of the Rural Home Appliance Subsidy Program

Table 7 Comparison between Different IT Distributors in China

Strengthening Cooperation with Chinese Telecom Operators and IT Retailers Could Be Beneficial for Foreign Vendors

If computer products are to penetrate rural areas, farmers will need to have demand for computers. Demand for computers among farmers mainly revolves around the need to obtain market information or their children's education. Therefore, Internet service is an essential element for computers sold in rural areas. Due to their early deployment in rural markets, Chinese PC vendors are ahead of foreign vendors in terms of sales network coverage, logistics capabilities and after-sales services. If foreign vendors are able to cooperate with telecoms such as China Mobile or China Unicom, participate in the IT development projects of the Chinese government in rural areas. and provide total solutions to farmers consisting of PCs and Internet services, their PC brands will see significant benefits.

As for after-sales services of foreign PC brands in rural areas, they could try to strengthen cooperation with Chinese IT retailers, such as Hisap and MC2. Compared to more general home appliance retailers such as Gome and Suning, IT retailers provide more professional PC training and maintenance services. They can complement the insufficiencies of foreign vendors in this area.

Table 7	Comparison between Different IT Distributors in China
Type		Representative Company	Characteristics	Advantages and Disadvantages
General Home Appliance Retailers		Gome, Suning	Operate in many product areas, including home appliances, 3C products etc; generate revenue through product price differences	Advantages: many stores, uniform product prices, high brand-name recognition Disadvantages: IT products not varied enough, relatively high prices
PC Plazas		Cybermart, Pacific Digital Plaza, Hilon, Buynow	Rent space to IT product distributors; they act as landlord, making money through rental fees	Advantages: Many vendors' products on offer, flexible prices Disadvantages: shopping environment needs to be improved; service quality varies; difficult to guard against fake products
IT Retailers		Hisap, MC2, HC Online	Mainly focus on IT products, generating revenue through price differences; they have service counters within their shops to offer maintenance services	Advantages: specialize in IT products; can provide professional advice to consumers; after-sales services guaranteed; maintenance service fees transparent Disadvantages: prices higher than PC plazas; fewer service points compared to large home appliance retailers
Source: MIC, March 2009

Appendix

List of Companies

A.O.Smith (China)		艾歐史密斯(中國）
Acer (Shanghai)		宏碁電腦(上海)
Amber		安博基業
Amoi		夏新
AOC		捷聯(AOC)
Apollo		阿波羅電器
Ariston Thermo Group		默洛尼衛生潔具(中國）
Aucma		澳柯瑪
Aux		奧克斯
Baixue		白雪
Baoerma Electrical Appliances		寶爾馬
Baoji Chang Ling		寶雞長嶺
BBK		步步高
Bingxiong		冰熊
Bird		波導
Boke		博克
Canbo		康寶
Changer		辰佳
Changfeng		長風
Changhong		長虹
Chant Group		長青
Chao Chen Industry		超臣
Chaodi Electrical		超迪
Chenyang		晨陽
Chiffo		前鋒
Chinabest Home Appliance		百得
Chongqing Oukai Electrical Appliance		歐凱
Chunlan		春蘭
Cofly Electric		科飛
Daneng		達能
Deer Electric		德爾電器
Dell (China)		戴爾(中國）
Dongbao		東寶
Dowell		多威爾
Dushi		杜氏實業
Eosin Electric		永生
Eyang		宇陽
Fangyuan		方圓
Feilong		飛龍
Ferroli (China)		法羅力（中國）
Fost		富士達
Founder		方正
Galanz		格蘭仕
Gaoxinqi		高新奇
Gelin		格林
Gemake Electric Appliance		格美淇
Gionee		金立
Goldfish		金魚
Great Wall		長城
Gree		格力
Guangmang Group		光芒
Haibao		海寶
Haier		海爾
Haifei		海飛
Hailishi		海利士
Hailu		海路
Hairui		海銳
Hangzhou Household Electric Appliances		杭州家用電器工業
Hasee		神舟
Henan Xinfei		新飛
Hicon		惠康
Hisense		海信
Hisense Kelon		海信科龍
Hitachi		日立
Hi-Tech Wealth		恒基偉業
Homa		奧馬
Hongtai Electrical Appliance		宏泰
Hotata Group		好太太
HP (Shanghai)		上海惠普
Huacai		華彩
Hualiang		華良
Hualu Mobile		華錄
Huamei		華美
Huaqiang Sanyo		華強三洋
Huari		華日
Huawei		華為
Huo Wang		火王
Inse		櫻雪
Jepson Digital Technology		傑普林
Jide		吉德電
Jinghong		晶弘
Jinling		金羚
Jinshuai		金帥
Jinsong		金松
Kanch		康泉
Kangwang Electrical Appliance		康王
KEG		韓電(KEG)
Kelon		科龍
Kenuo		科諾
Kong Profit		港利通
Konka		康佳
LAMO Electrical Appliance		浪木電器
Langchao		浪潮
Lenovo		聯想
Lenovo Mobile		聯想移動通信
Lesli		樂士
LG		樂金
LG Panda		樂金熊貓
Limin		利民
Little Duck		小鴨
Little Swan		小天鵝
LT Mobile		特靈通
Macro		萬家樂
Malata		萬利達
Man Jiang		滿疆
Meiling		美菱
Meiling England Kate Electrical Appliances		英凱特
Meipuda		美普達
Meiyi		美意
Midea		美的
Miman		美滿
Motorola		摩托羅拉
Narcissus Electric Appliance		水仙
Newsmy		紐曼
Ningbo Baojie Electrical Appliance		寶潔
Ningbo Kingsun Group		金帥
Ningbo Riying Electric Appliance		日櫻
Ningbo South Electrical Appliance		南方電器
Nokia		諾基亞
Ouyi Electrical Appliances		歐意
Panasonic		松下
Panda		熊貓
Qisheng		奇聲
Qishuai		奇帥
Redsun		紅日
Rongsheng		容聲
Rowa		樂華
Royalstar		榮事達
Royalstar-Sanyo		榮事達三洋
Sacon		帥康
Saiyi		賽億
Sakura (China)		櫻花衛廚(中國)
Sampo Enterprise (Tianjin)		新寶企業（天津）
Samsung		三星
Sanjin		三金
Sanyo		三洋
Sanyou Industrial		三酉實業
Shanggong Electric Appliance		上工電器
Shenzhou		神州
Shinco		新科
Shuanglu		雙鹿
Shunda Industrial		順達實業
Sidelong International Electrical (China)		賽德隆國際電器（中國）
Siemens		博西華(Siemens)
Skyworth		創維
Smales Electric Kitchen & Lavatory Utensils		史麥斯
Sogood		索佳
Southwest Computer		西南電腦
Soyea		索伊
Soyea		數源科技
Suiling		穗淩
TCL		TCL
TCL Mobile		TCL移動通信
Tianjin Sanlin		天津三林
Tianyu		天宇朗通
Tianze		天澤
Tongfang		同方
Tongyi Electrical Appliance		統一電器
Unitone		友利通
UTStarcom		UT斯達康
Vanward Group		萬和
Vatti		華帝
Wanai		萬愛
Wanbao		萬寶
Wanshifa		萬事發
Wanxi		萬喜
Weber Electric Appliances		威博
Weili		威力
Weking		威王
Whirlpool		惠而浦
Xianqi		賢妻
Xiaojinyu		小金魚
Xinbao		新寶實業
Xinfei		新飛
Xingxing		星星
Xinle		新樂
Xintianyang		新天洋
Xinyang		新揚
Xoceco		廈華
Xunda Group		迅達
Yair		揚子
Yiheyuan Mobile		億和源
Yinke		銀科
Yuetu Electric Appliance		月兔
Zerowatt Electric Appliance		齊洛瓦
Zhaobang		兆邦
Zhejiang More Electric Appliances		摩爾
Zhejiang Tianlu Electric Appliance		天路
Zhengzhong		正中電器
Zhenhua		振華
Zhicheng		智誠
Zhigao		志高
Zhongri Electric		中日家用電器
Zhongyi Electrical Appliances		中意電器
Ziteng		紫藤
ZTE		中興
Zungui		尊貴電器

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