Rural home appliance subsidy to expire

The Ministry of Finance announced Thursday that the current subsidy program for home appliance purchases in rural areas will expire by the end of January 2013, but similar programs are expected to be launched to boost domestic consumption and drive growth amid the economic downturn.

The program will come to an end in 10 cities by the end of November and expire across the country by next January, the ministry said on its website.

Unsold goods under the subsidy program will be sold as normal goods and home appliance sellers will be asked to stop promotion of their products under the name of the rural subsidy program, the announcement said.

The program began in 2009 and saw 283 million units of home appliances sold to rural consumers, with total sales of 681.1 billion yuan ($109.25 billion) by October this year, the Ministry of Commerce said in a statement last week.

If similar boosting policies can be carried out in the future, it will benefit consumers as well as enhancing industrial development and technological updates, Zhang Xuan, head of home appliance maker Changhong Group's market support center, told the Global Times.

The Ministry of Industry and Information Technology said on October 31 that it is working on a follow-up policy to support the development of the home appliance industry.

However, some analysts and companies said the rural subsidy program for home appliances has achieved its intended effect and that it should now come to an end.

The policy drove home appliance firms' sales and helped them tap into the rural market before 2010, but it has had much less effect since then and there is limited room for further market growth if the policy continues, Liu Buchen, a home appliance analyst with consultancy Jiachunqiu Media, said Thursday.

"Some uncompetitive companies survive by relying on government subsidies, which is not good for the industry," Liu said, noting that the industry needs competition rather than administrative measures, despite the sluggish market at the moment.

Yang Dongwen, president of Shenzhen-based home appliance maker Skyworth Group, was quoted by Beijing Business Today newspaper Thursday as saying that the industry does not need policy interference and that a new subsidy policy may not have much effect.

However, it is now the top priority of China to boost consumption, as stressed in the keynote report delivered to the 18th National Congress of the Communist Party of China, and efforts concerning income distribution reform and subsidies for consumption have direct and prompt effects, Zhao Ping, a researcher at the Ministry of Commerce, told the Global Times Thursday.

The country also carried out a new-for-old home appliance program from 2009 to the end of 2011 and a subsidy program for energy-efficient appliances that started in June this year.

These subsidy policies have had a noticeable effect on boosting consumption, and have enhanced the popularity of these goods, Zhao said.