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A few days ago, the State Council issued the "Action Plan for Promoting Large-scale Equipment Renewal and Consumer Goods Trade-in" (hereinafter referred to as the "Action Plan") to coordinate the expansion of domestic demand and deepen the supply-side structural reform, combined with the differentiated needs of various equipment and consumer goods upgrading, focusing on the implementation of equipment renewal, consumer goods for the old, recycling, and standard improvement. The Action Plan proposes to implement the trade-in of consumer goods. Carry out the trade-in of automobiles and home appliances, and promote the replacement of home improvement consumer goods.
According to data from the National Development and Reform Commission, the preliminary estimate of equipment renewal will be a huge market with an annual scale of more than 5 trillion yuan. At the same time, the upgrading of automobiles and home appliances will also create a trillion-scale market space. Under the Action Plan for Promoting the Trade-in of Consumer Goods, various regions and e-commerce retail enterprises have launched corresponding subsidy activities.
Recently, Jingdong Group announced the establishment of the "Jingdong Home Appliance Home Furnishing Alliance" with 100 home appliance brands such as Haier, Gree, and Midea, and joined hands with 20 provinces and cities to successively implement trade-in subsidies to promote the trade-in business of home appliances.
Gree Electric reported on April 28 that in response to the State Council's "Action Plan for Promoting Large-scale Equipment Renewal and Consumer Goods Trade-in", the company decided that from now on, Gree Electric will invest 3 billion yuan to start the trade-in activities for household appliances. Consumers can learn more about the event through the Gree Dong Pearl Store and more than 30,000 specialty stores across the country.
At present, the mainland home appliance market has entered the peak period of upgrading. Dong Mingzhu, a deputy to the National People's Congress and chairman and president of Gree Electric Appliances, suggested that home appliance companies independently bear the trade-in subsidy.
Dong Mingzhu said that in the past, the state implemented projects such as "household appliances going to the countryside", "energy-saving subsidies" and "exchanging the old for the new", which could indeed better activate purchasing power and expand consumption, but there were also many unscrupulous enterprises that took advantage of the policy to exploit loopholes, bringing losses to the government, and the quality of the products purchased by consumers could not be guaranteed. In this regard, Deputy Dong Mingzhu suggested that it should be made clear that enterprises should independently bear the responsibility of exchanging the old for the new, and cancel excessive government subsidies. At the same time, standardize the second-hand home appliance market, establish and improve the recycling system of waste household appliances, strengthen supervision and evaluation, and improve consumer participation.
Looking back at the development of the mainland home appliance industry:
-- The output of household appliances
Air conditioners, refrigerators, color TVs, and washing machines are the most common household appliances, and the output of these commonly used appliances is also growing as the number of Chinese home appliance companies grows and their production capacity increases. In 2022, the output of household air conditioners, refrigerators, color TVs, and washing machines will increase by 4.12 million units, decrease by 3.28 million units, increase by 10.82 million units, and increase by 4.88 million units respectively from the previous year.
-- Demand for household appliances
According to AVC data, from 2018 to 2021, the retail sales of color TVs and air conditioners in China will increase first and then decline, with 46.89 million units and 38.35 million units in 2021, respectively. From 2018 to 2021, China's washing machine sales were basically stable at about 37 million units, and refrigerators were stable at about 32 million units, compared with 37.18 million units and 31.88 million units in 2021, respectively.
In recent years, due to the influence of lifestyle habits such as the "stay-at-home economy", the proportion of retail sales of household appliances such as household appliances and kitchen appliances has increased. In 2021, among all types of household appliances in China, the sales of household appliances and kitchen appliances accounted for the largest proportion, and the sales of household appliances accounted for more than 25%. In the single product category, the sales of home appliances such as air conditioners and color TVs account for a relatively high proportion.
-- Sales of household appliances
In 2020, the sales scale of China's home appliances reached 833.3 billion yuan, a year-on-year decrease of 6.48%. In 2021, the size of China's home appliance market will be 881.1 billion yuan, a year-on-year increase of 5.7%, and the growth will mainly come from the demand for home appliances in the sinking market (cities below the third tier, counties and towns and rural areas).
According to the analysis of the Prospective Industry Research Institute, with the expansion of the scale of the sinking market, the growth of demand for smart home appliances and the diversification of marketing methods, the new and replacement demand space of the mainland home appliance market is still very huge. It is estimated that the growth rate of retail sales in the home appliance industry market will be about 5%, and the retail sales of the mainland home appliance industry will exceed 1,180.8 billion yuan by 2027.
Wen Jianping, chairman of AVC, said that the country's new round of trade-in policy, if implemented and coordinated properly, is initially estimated to have a 2%-3% pull effect on the domestic home appliance market this year. In 2023, the retail sales of the domestic home appliance market will be 849.8 billion yuan, and if there is no new policy, it is expected to increase by 0.6% year-on-year in 2024; With the new policy, it is expected to increase by 2%-3%, so that the rhythm of some consumption is advanced, and the retail sales of the domestic home appliance market may increase to about 880 billion yuan this year.
According to the CITIC Securities report, it is expected that a new round of trade-in policy is expected to drive domestic sales of home appliances to increase by about 13% year-on-year. Terminal consumer goods and industrial chain parts enterprises are expected to fully benefit. A new round of large-scale equipment renewal policies has been introduced to promote the release of demand in the home appliance manufacturing industry. Catalyzed by product upgrading and policies, manufacturers of terminal consumer goods, parts and equipment in the industrial chain are expected to benefit greatly, and emerging intelligent manufacturing is expected to accelerate the benefits in the process of improving the quality and efficiency of the industry.
Prospective Economist APP Information Group
For more research and analysis of this industry, please refer to the "Market Prospect and Investment Strategic Planning Analysis Report of China's Home Appliance Industry" by the Prospective Industry Research Institute.
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