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Household appliance sector sees tough days ahead

By Yu Hongyan (chinadaily.com.cn)
Updated: 2008-11-13 17:26

China's household appliance industry has run off the super-speed track and may further cool down in the coming years, according to a report jointly released by the National Bureau of Statistics (NBS) and a market researching company on Tuesday.

The 2008 China household appliance index monitoring report was released by NBS's China Economic Monitoring & Analysis Center and China Market Monitor Co Ltd. The paper expects China's household appliance industry will suffer a serious impact in the next two or three years.

Statistics show that the household appliance industry index has fallen for three consecutive quarters. Based on 2003's base point of 100, indexes of the first three quarter this year were 100.85, 100.48 and 99.77 respectively, and the fourth quarter figure is expected to fall further.

Besides the dip in the industry index, demand in this sector also shrank at home and aboard. The growth rates in terms of sales volume were 18.8 percent and 18.6 percent in July and August respectively, compared to an average 23.2 percent in the first quarter.

The export volume of air conditioners has stood at the same level as last year by the end of August, and the growth rate of exports of color TV sets dropped from the second quarter's 20 percent to September's 14.1 percent.

The declining sales volume has also led to shrinking profits. The growth rate of adjusted profit of the industry fell from the first quarter's 33.59 percent to 7.5 percent in the third quarter, and profit in the fourth quarter is estimated to fall to 5.02 percent.

The year-on-year investment growth rates in the first three quarters are 30.70 percent, 31.91 percent and 37.46 percent respectively. However, the report stated that leaving out the price factor, investments in this sector is on a actually descending trend.

However, Xie Hongguang, deputy director of the NBS is positive about the future of this industry. Speaking at the press conference releasing the report, he said that the expansion of domestic demand will shore up the industry, thanks to increases in household income, the improvement of the consuming environment and social security mechanisms.

Late last month, the Ministry of Commerce and Ministry of Finance jointly launched a plan to promote the consumption of household appliances in rural areas with a subsidy of 13 percent to rural consumers on specified products.

The plan is set to benefit 393 million farmers in 12 provinces and two cities, accounting for 53.19 percent of the country's rural residents, with an estimated consumption capacity on this sector reaching 46.52 billion yuan ($6.80 billion) per year.