On April 28, 2024, the Guangdong Province Consumer Goods Trade in Action (referred to as the Action) was officially launched. The reporter from First Financial News learned that the implementation time of the action is from May 1st to December 31st, and the first round is from May 1st to August 31st. A second round will be launched within the year depending on the situation; In the first round, Guangdong Province provided a subsidy of 370 million yuan, including a 10% subsidy for household appliances.
The subsidy standard for exchanging old appliances for new ones is no more than 10% of the sales price of newly purchased appliances. The subsidy amount for each household appliance (or single consumption voucher) does not exceed 500 yuan, and the subsidy for a single consumer does not exceed 2000 yuan.
Some automobile, household appliance, home decoration, circulation, and financial enterprises have participated in this trade in campaign, providing promotional and subsidy support. For example, Gree Electric announced on April 28th that it will invest 3 billion yuan to launch a nationwide exchange for old appliances campaign. Relevant personnel stated that the maximum subsidy for air conditioning hanging up is 1000 yuan; Midea Group has invested 2 billion yuan in the national trade in activity, with a maximum subsidy of 1000 yuan per product; JD Five Star Guangzhou Company provides a one-stop delivery service for new and old items, with a maximum subsidy of 20%; Suning.com promotes the exchange of old appliances for new ones in the Guangzhou area, with a maximum subsidy of 5000 yuan per user; Sofia provides a subsidy of one billion yuan.
Guangdong Province is a major producer and consumer of automobiles and household appliances, with a total of approximately 6 million vehicles in use for 10 years and 1.5 million vehicles in use for 15 years. The total number of televisions, air conditioners, refrigerators, washing machines, and computers is approximately 250 million. Guangdong’s consumption accounts for approximately 11.8% of the national consumption, and its household appliance consumption accounts for approximately 11.7% of the national household appliance consumption. Therefore, Guangdong Province has great market potential for exchanging old for new consumer goods.
On April 12th this year, the Ministry of Commerce and 14 other departments jointly formulated the Action Plan for Promoting the Trade in of Consumer Goods (referred to as the Plan). The plan proposes to carry out the nationwide renovation of automobiles, household appliances, and home furnishings, kitchens, and bathrooms. In terms of household appliances, we strive to further increase the market share of high-efficiency and energy-saving household appliances by 2025, and the amount of waste household appliances recycled will increase by 15% compared to 2023; By 2027, the recycling volume of waste household appliances will increase by 30% compared to 2023. The plan also proposes to encourage eligible places to provide subsidies to consumers for purchasing green smart home appliances.
Public information shows that two weeks after the announcement of the plan, more than 10 places in China, including Nanjing, Shandong, Shanghai, Shanxi, Zhejiang, Yunnan, Chongqing, Guangdong, Suzhou, and Fengtai in Beijing, have released implementation plans for exchanging old for new household appliances and other consumer goods.
AVC Chairman Wen Jianping previously analyzed to First Financial reporters that the new round of the national policy of exchanging old for new, if properly implemented and coordinated by various regions, is estimated to have a 2% -3% driving effect on the domestic home appliance market this year. In 2023, the retail sales of the domestic home appliance market reached 849.8 billion yuan. Without new policies, 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% more, which will accelerate the pace of some consumption. This year, the retail sales of the domestic home appliance market may increase to about 880 billion yuan.
“Due to the current round of exchanging old appliances for new ones, the government is encouraging the consumption of green and intelligent appliances, which is expected to be particularly beneficial for the upgrading and replacement of high power consuming appliances such as air conditioners, refrigerators, and water heaters.” Pei Dongmin, Deputy General Manager of the Home Appliance Business Unit of Aowei Cloud Network, told reporters that in 2022, the theoretical scrapping volume of China’s home appliance market is about 70 million color TVs, about 50 million air conditioners, and about 30-40 million refrigerators and washing machines respectively. The proportion of formal dismantling is about 40%, and there is still a lot of room for “recycling”.
(Intern Huang Wenluo also contributed to this article)