Money

Govt not ready to pull plug on trade-in subsidy

By Liu Yujie (China Daily)
Updated: 2010-06-02 07:50

Beijing municipal government has extended its subsidy program for household electrical appliances to continue boosting consumption.

The scheme was put into practice in the capital in August 2009 and was originally set to end on May 31.

However, major electrical appliance retailers in the city have not yet received formal notice to end the program, which is aimed at encouraging trade-ins.

The Beijing Municipal Commission of Commerce (BMCC) has since confirmed the program will remain in place, but has not said when it will now end.

Beijing Evening News reported on Monday it is unclear how much longer the program will continue, but many consumers are expecting it to last until the end of the year.

A customer service agent at Suning Appliance told METRO on Tuesday the subsidy for electronics trade-ins was still available and that the company was waiting for details on how much longer it would operate.

She said consumers received cash-off vouchers when they turned in their old electrical appliances. Customers can still redeem those vouchers, which are worth a 10 percent discount off new electrical products.

The scheme is funded by the government and aimed at boosting consumer spending.

"The program is welcomed by consumers. I think that's why it may have been prolonged," said the agent.

However, a customer service agent at Gome Electrical Appliances was unsure about the future of the scheme when asked by METRO and suggested people wait a few days before calling for an update.

A senior officer of Gome Electrical Appliances, surnamed Tian, told METRO the company had not received notice yet from the BMCC, but believes the program is being extended.

"Sales attributed to the trade-in program take up more than 20 percent of the total volume at Gome. I think it is an effective way to stimulate consumption," Tian said.

Statistics from Suning also show that sales have spiked since the launch of the program. The company says it has seen an increase of 40 percent compared to the same period in 2009.

According to statistics from the BMCC, 957,000 electrical appliances were traded in throughout the capital from Aug 10 last year to April 22. Some 888,000 new appliances worth billions of yuan were bought as a result.

The government has handed out 270 million yuan in subsidies.

Critics said an extension of the program will not further stimulate consumption in the longer term because electrical appliances are durable products that do not need constant replacement and those wanting new appliances would likely have already purchased them.