The Chinese government promulgated three different policies — “Government Subsidy to Energy-Saving Household Appliance,” “Household Appliance Trade-in,” and “Home Appliance Subsidy Program for Rural Areas” — to stimulate the purchase of energy-efficient home appliances. Many manufacturers benefited from these policies over the last three years, and the room air conditioning market gained momentum and flourished. But, in June 2011, the Government Subsidy to Energy-Saving Household Appliance came to an end, followed by the Household Appliance Trade-In credit at the close of 2011. The Home Appliance Subsidy Program for Rural Areas is expected to end in 2012.

Frost & Sullivan recently forecasted declines in China’s room air conditioning market due to declining exports, increased raw material prices, and an inventory backlog. In the three-year bullish market, due to the government’s policies, most room air conditioner manufacturers expanded production capacity. Due to rainstorms in the early summer, and the end of the 2011 incentives, the room air conditioning sales volume decreased sharply in south China. This decrease left huge amounts of inventory for manufacturers, said the report.

The report also stated that China is recognized as having the largest HVAC market in the world and, while room air conditioners slumped, China’s HVAC market showed great increases.

In 2011, China’s HVAC market was driven by a boom in China’s commercial property, energy-saving policies from its 12th five-year plan, and multiple applied fields like high-end real estate, said Frost & Sullivan’s release.

It is estimated that China’s HVAC market was RMB 50 billion in 2011, up 20 percent when compared to 2010 statistics. Considering other driving forces like favorable economic development, urban population growth, rising income, and a growing retail market, Frost & Sullivan is predicting that the total market size will be RMB 110.7 billion in 2015, with a compound annual growth rate of 20 percent.

Publication date: 04/30/2012