Special Report:Global Financial Crisis
By Chinese media writers Lu Chuanzhong, Pei Jianrong, Shen Yang
NANCHANG, Feb. 27 (Chinese media) -- Strolling a rural home appliance shop, Shen
Liangsheng asked salespeople questions about the freezers on display as he
considered buying one for his small village grocery store.
The 61-year-old from Liantang Township of east China's Jiangxi Province,
was considering taking advantage of the government's subsidy to farmers for
household appliance -- a nationwide policy that was rolled out in February.
"The old freezer is in bad shape, but still can do with at the moment.
Since we enjoy the preferential policy, why not buy a new one?" said Shen.
Under the new program, more than 900 million farmers are eligible for a
subsidy equal to 13 percent of the prices of home appliances they bought. The
four-year policy was designed to stimulate rural consumption to boost domestic
demand as exports weaken amid the financial crisis.
Increased sales could also help home appliance manufacturers upgrade their
businesses and fare better in the economic downturn.
A pilot project began in December 2007 in the Henan, Shandong and Sichuan
provinces, and was extended to nine more provinces a year later. It was
nationally adopted as of Feb. 1.
Ten types of products are covered under the policy: Color TV sets,
refrigerators or freezers, mobile phones, washing machines, computers, water
heaters, motorcycles, air conditioners, electro magnetic cookers and microwave
ovens.
Price caps are set for these products. The rebate to the consumers is
shouldered 80 percent by the central fiscal government, and 20 percent by
provincial fiscal governments.
Only retailers who have won bids will be able to participate in the
program.
Each household is allowed to buy two subsidized items under each product
type, easing the original limit of one for each.
In Luoshe Village of Youlan Township, about a 20-minutes drive from
Liantang, 45-year-old Yu Yunquan purchased a subsidized refrigerator, priced at
1,999 yuan (292 U.S. dollars), as part of the dowries for his daughter's
wedding.
Yu said he had been considering buying a subsidized refrigerator for his
home as well some day.
"Appliances like fridges, color TVs and washing machines are very common in
city homes. Now we farmers also want these things as more and more of us can
afford them."
An estimate by the Ministry of Finance earlier this month showed sales of
up to 600 million home appliances in rural China by 2012, or during the
four-year implementation of the policy. The plan is expected to spur domestic
spending by 1.6 trillion yuan (234 billion U.S. dollars).
In Shandong, one of the pilot provinces, more than 1 million subsidized
products were sold as of early January, generating sales value of 1.7 billion
yuan. Sales of refrigerators and color TVs in Henan last year doubled compared
with 2007, and its total sales of designated appliances reached 1.6 million
units worth 2 billion yuan.
The two regions are strong indications that the national goal is feasible.
Wang Bao'an, an official with the ministry, said the program was the first
time the country has leveraged its fiscal subsidy instrument for the consumer
market. He also expected the project to help upgrade rural quality of life.
Although they welcomed the offer, farmers like Yu and Shen also had their
own concerns.
"It's good to pay less, but we want more than that," said Yu. "The
products' quality and after-sale services are equally important. We want name
brands, and won't buy low-quality ones no matter how cheap they are."
Shen said he had heard that the rebate process was somewhat lengthy due to
the government's efforts to keep the money secure.
"I still want the process to be simple and fast."
The government is taking steps to address these concerns.
In early February, the General Administration of Quality Supervision,
Inspection and Quarantine urged its local offices to beef up quality control of
subsidized products sold in the countryside and the supervision of enterprises
that have won the bids for the project.
Unqualified products will be recalled and enterprises found with
substandard products or poor post-sale services will be blacklisted,
disqualified and punished according to laws, it warned.
A conference of the State Council (Cabinet) on Feb. 19 also decided to
simplify the rebate collection procedure for farmers. As the process is refined,
rebates will be collected by consumers through their banking accounts at
point-of-sale. Cash will be rebated in remote areas with less developed banking
networks.
"I never expected to get money for buying home appliances," said a happy
Yu, although at the moment he still has to wait for one month before the rebate
of 260 yuan is channeled into his account.
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