Dallas, TX -- (SBWIRE) -- 01/23/2012 -- Growth slows in 2011, but remains healthy

Consumer appliances continued to see dynamic growth in 2011, which was mainly due to increasing disposable incomes and the impact of the government’s stimulus packages. Nevertheless, compared with 2010, 2011 witnessed relatively weaker volume growth, especially in the second half of the year, as the government’s stimulus packages partially ended at the end of 2011, which hurt a bit on overall volume growth of consumer appliances. According to Euromonitor International, in urban areas where penetration rates were already quite high, a large proportion of retail volume sales came from upgrading demand, whilst in rural areas demand was primarily dominated by first-time purchases because of low penetration, especially for small appliances. As a consequence, the rural market experienced much higher growth than cities, and is gradually becoming the main driver of growth in consumer appliances.

The impact of the government’s stimulus packages starts to fade

At the end of 2011, the Rural Household Appliance Subsidy Programme ended in Henan, Shandong and Sichuan, the three most populated provinces in China, and the rest of the provinces will follow in 2012. An obvious slowdown in the growth of consumer appliances, particularly in major appliances, was observed from the end of 2011, indicating that the golden age of national supportive policies had passed, and the growth of consumer appliances tended to be steadier.

Energy-efficient appliances gain popularity

In 2011 consumer appliances witnessed an acceleration of energy-efficiency remodelling, with manufacturers expending more effort in terms of restructuring from conventional to energy-efficient products. In urban areas in particular consumers were more willing to purchase energy-efficient products, in spite of the fact that they cost a little more, due to the growing concern about rising electricity and water prices.

Also, the government’s supportive policies, represented by energy-efficiency standards and labelling and stimulus compensation policies, did a perfect job of spurring demand for highly efficient products in the country. Nowadays, energy-saving has become the most significant trend in consumer appliances, especially in air conditioners, in which energy-saving products account for a large share of total sales.

Air conditioners grows robustly despite the end of supportive policies

Air conditioners was one of the best performing categories within consumer appliances in 2011, with double-digit volume growth, despite the withdrawal of the government’s supportive policies. This growth, according to Euromonitor International, was underpinned by premiumisation and demand for energy-efficiency in cities, and first-time purchase demand in rural areas. Notably, by taking advantage of the Rural Household Appliance Subsidy Programme, more and more local manufacturers successfully spread their distribution channels to rural markets where the penetration of air conditioners was low, which was the major stimulus for the vigorous growth in rural areas.

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