Appliances Replacement Program Effective: MOFCOM

The country's consumption has been effectively boosted by the old-for-new home appliances program, the Ministry of Commerce (MOFCOM) said February 25.

All told 7.22 million old home appliances had been replaced as of February 20 in 2010. Sales of new home appliances totaled 6.67 million units, with a value of 26.45 billion yuan ($3.87 billion), Yao Jian, spokesman for the MOFCOM, said.

The program has given out 2.65 billion yuan ($388.12 million) in subsidies to date, benefiting more than 6 million families. Most of the new home appliances sold were middle- to high-end, with an average price around 4,000 yuan ($585.85) per unit, according to figures from the MOFCOM.

The replacement program offers subsidies of up to 10 percent to consumers, and was launched in nine pilot provinces and cities including Beijing and Shanghai in August. Five household items, including TVs, refrigerators, washing machines, air conditioners and computers, are covered in the program.

The program has helped boost home appliances consumption and spurred domestic demand, Yao said. Sales of new home appliances account for nearly one third of the sales of the five items included in the program, and about one fifth of total sales of home appliances, according to data released by the MOFCOM.

Income figures generated by the replacement program at Suning, the country's largest electrical appliances retailer by market value, reflect the MOFCOM's data.

Suning had replaced 1.33 million old household items as of January 8, with sales exceeding 5 billion yuan ($732.31 million), giving it the largest market share in the household replacement categories, the company said in a statement released in January. TVs were the most popular buy among consumers. TVs accounted for more than half the company's sales revenue, reaching 2.6 billion yuan ($380.80 million), Suning said in the statement.

The subsidies lured Wang Siyi, a resident of Suzhou, Jiangsu Province, to buy two new TVs. She bought a 32-inch Panasonic LCD TV for around 4,000 yuan in January, and a 40-inch Toshiba LCD TV for about 6,000 yuan ($878.77) a few days ago, receiving discounts on both for turning in her old TVs to the retailer.

She said the subsidies were not high enough, however. The Toshiba LCD TV was more expensive, but the subsidy she received was about the same as that for the Panasonic LCD TV. "The upper limits for the subsidies are too low," Wang said. The highest subsidy for TVs is 400 yuan ($58.59) at present.

Higher subsidies may be on the way, as the State Council stated in December that the upper limit would be raised substantially, and the program will be expanded to more regions that are capable of refurbishing old appliances.

The State Council also said February 24 that the old-for-new program will cover more household items than the current five in the future.