Rural home appliance sales in China recorded robust increase in March 2009 on account of the government’s subsidy program aimed at boosting rural spending.
According to the Ministry of Commerce, household appliance sales in rural regions of China surged over 70% in March 2009 from the previous month, as the subsidies offered to Chinese farmers to purchase such products started paying off, as reported by China View.
As of February 1, 2009, China began granting subsidies (equating to 13% of the selected home appliances’ cost) to 900 Million farmers in an attempt to promote spending in the rural regions. In March 2009, the government sold overall 1.49 Million subsidized household appliances worth 2.24 Billion Yuan (US$ 329.4 Million) to the farmers.
The sales recorded in March constituted over half of the total sales during Q1 2009. This subsidy scheme was launched in 3 provinces of China on trial basis in December 2007. Initially, the program covered selected brands of refrigerators, freezers, washing machines, color TVs and mobile phones. However, later in February 2009, the program was extended throughout the country and coverage expanded to appliances such as water heaters, air conditioners, computers and motorcycles.
It appears as if consumer expenditure has started improving, but earlier consumers were showing reluctance to spending. However, the billion dollar question is how much sustainable is this growth in sales, particularly in a gloomy economic environment.
Moreover, the Ministry of Commerce is also looking forward to introduce a “household management service promotion” scheme with the aim of boosting domestic demand. The Ministry, under this program, will assist local governments in setting up household management service centers in 287 cities during a time span of three years.
In China, domestic demand is the third most important driver of the economy; trade and investment being the first two. Hence, this measure will ensure that the Chinese household management firms obtain professional training and urban people can easily access home management services.
According to a Research Analyst at RNCOS, “Domestic consumption in China has experienced fast and steady growth. Also, domestic sales would continue to grow steadily and comparatively fast on account of robust increase in bank savings and income of Chinese people.”
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