Home appliances sector set for growth
By Pan Xiaoyi |
February 11, 2010, Thursday
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Print Edition
Print Edition
CHINA'S home appliance industry is expected to grow steadily this year as the government pledges stronger support to bolster domestic consumption and exports continue to recover, analysts said.
But they also cautioned that profit margins of appliance makers may suffer as raw material prices increase.
China has raised the price caps for "home appliances to the rural area" scheme to boost sales of products at the higher end. In addition, the 10 percent subsidies on replacing energy efficient goods will extend to more cities from nine pilot ones.
"The adjustment will facilitate sales of products with higher profit margins, stimulating the market potential in terms of both quantity and profitability," Xiangcai Securities Co wrote.
The scheme, which started at the end of 2008, has boosted sales of 92.45 million units worth 162.8 billion yuan (US$23.9 billion) in 2009. A total of 5.2 million units valued at 20.6 billion yuan were sold as replacements for older appliances under a May 2009 plan promoting the replacing of home appliances.
The stimulus packages will continue to be the driver for the industry growth, analysts said.
Galaxy Securities Co predicted the home appliance market to grow by 14.21 percent in 2010. In comparison with the latest figures, sales in 2008 jumped 13.3 percent to 667.9 billion yuan.
Exports bottomed out in April when they fell 23.8 percent from a year earlier and gradually picked up in the second half of last year. The drop in exports narrowed to 5.7 percent in September.
"Exports have shown signs of a recovery and the home appliance exports are expected to increase by 12.5 percent on a yearly base," said Zhu Lijun, a Galaxy Securities Co analyst.
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