Chinese Appliance Makers to Focus on R&D
May 12, 2004
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An industry expert said hot competition in China's home appliance industry will shift from price wars to a technology contest in the near future, China Daily reports.

"It will be hard for enterprises, which focus on price wars rather than technical upgrading, to survive in market in the future," said Lu Renbo from the Research Institute of Market Economy under the Development Research Centre of the State Council.

The reason is Chinese consumers have changed their attention from product price to quality and performance, he said at a forum on building the competitiveness of the home appliance industry.

According to the survey focusing on the home appliance market and conducted by Mr. Lu's institute, in 2000, 83.4 percent of those polled said low prices were key when deciding which product to purchase.

However, 85.1 percent of respondents regard good quality and performance of home appliances as being more important than price this year.

"Changing consumption trends have urged home appliance makers to invest more in technology innovation and new product development, to improve their competitiveness," Mr. Lu said.

Some domestic manufacturers, like Changhong, Hisense, and Kelon, have seen the new consumption trend and have been shifting their focus on research and development, he added. "In the long term, technology will become one of the key factors driving the industry's development," Mr. Lu said.

In the past several years, though, price wars have contributed to the rapid growth of China's home appliance industry, which sustained a two-digit growth annually.

He also pointed out at the forum that energy-conservation technology needs to be developed by home appliance makers.

The short supply of power has been a serious problem affecting the country's economy since last year, and home electrical appliances like refrigerators and air-conditioners are widely considered as heavy power consumers.

Statistics show that there are at least 130 million refrigerators in the country consuming nearly half of all residential power supply. Air-conditioners eat up more than 40 billion kilowatts-hours every year, a figure that is set to increase.

The survey conducted recently by Mr. Lu's institute shows most consumers have become aware of energy conservation and now prefer to buy energy-efficient models. (China Daily)

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