The big chill

Farmers in Sichuan Province learn about the subsidies for home appliances. Photo: CFP

By Tu Lei

The national rural home appliance push meant to boost country lifestyles and the overall economy as part of China's national stimulus package has slowed after a fast start.

The four-year project began on December 1, 2008, selling electric appliances at prices 13 percent lower than in cities.

According to the Ministry of Commerce (MOFCOM), overall sales figures have shown a steady decline since July, especially for air conditioners and refrigerators, largely due to seasonal factors.

But the paperwork and red tape needed for rural buyers to receive rebates is also seen by some analysts as a factor, though the waiting time for the cash rebates has been officially shortened to 15 days from periods as long as two months in some areas.

The MOFCOM said 6.18 billion yuan ($904.97 million) worth of appliances were sold in September, with a sales volume of 3.16 million units. Those figures were down 18.66 and 16.58 percent respectively compared with August, and dipped 30 and 26 percent respectively compared to July.

However, of the nine appliance categories, six such as washing machines, heaters, and color TVs saw rising sales. Refrigerators and air conditioners, which account for the biggest part in the rebate project, witnessed a big September decline, as did computers and cell phones.

The September sales total for air conditioners was 940 million yuan ($137.69 million), down 42 percent from August, and 2.526 billion yuan worth ($307.02 million) of refrigerators were sold in September, meaning a 30 percent drop from August. The sales volume in August dropped by 35 and 22 percent compared from July.

The decline is mainly due to cooler weather, said Xu Dongsheng, vice-secretary general from the China Household Electrical Appliances Association (CHEAA).

"It's natural to see declining sales of air conditioners and refrigerators, because the hottest season has passed," Xu told the Global Times.

Deng Xingxing, a Haier shopkeeper in Lichuan County in East China's Jiangxi Province, said the slow rebate process was troublesome. He told the Global Times that buyers must go many times to the village's finance department to fill out paperwork and then get the rebates.

"It is ok if the subsidies are as high as 500 yuan ($73.24), but normally, the rebate is about 200 yuan ($29.29), and some buyers don't like to spend time on it, because it's too troublesome," said Deng.

A survey done by Aux, an air conditioner producer based in Zhejiang Province, showed respondents said lengthy complicated rebate process had hindered the promotion.

Some potential buyers said they decided not to make the purchase because the rebates were not immediately available at the store, said Li Xi, the Aux vice president who is responsible for his company's part in the rural appliance project. Sales were also hindered because dealers found it difficult to explain the rebate policies, he added.

To help solve the problem, in a proposal written to the government, Aux suggested that 13 percent of the subsidies should be given to the producers directly in order to allow them to give money directly to stores.

The Haier seller Deng also said she wished her store could give money back to customers directly, making it easier for both sellers and buyers.

The limit on items available under the program is another inconvenience, said some shop owners.

Zhou Shiqing, who owns a cell phone shop in Lichuan County, said he has only sold two phones since the project began.

The price for phones available under the project is below 1,000 yuan ($146.48), and the rebates are 130 yuan ($19.04) at the most, with the most being about 40 or 50 yuan ($5.9 or $7.3). Lots of paperwork and long waits for 40 or 50 yuan means customers will choose other phones, said Zhou.

In Panyu, Guangdong Province, a Haier dealer said the upper limit of 2,000 to 3,000 yuan ($292.97-$439.45) for the project appliances crimped his profits, and made it hard to meet demands in some urban areas, reported 21st Century Business Herald.

According to the project's guidelines, the highest price for a color TV is 3,500 yuan ($512.69), and 4,000 yuan ($585.93) for an air conditioner.

To ease the process, the CHEAA said it will expand the types of refrigerators, washing machines and freezers/coolers from 15 to 30 in 2010, and the Ministry of Finance is expected to lift the price limits.

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