In 2025, the national subsidy policy for consumer goods scrappage and replacement will usher in a systemic transformation in the home appliance industry, with impacts that are both immediate and long-lasting, spanning the next 2-3 years. This policy not only stimulates consumption but also risks overdrafting demand. Are home appliance manufacturers mentally and strategically prepared for this?

By Wen Jian

Manufacturers are well aware that the implementation of this national subsidy policy will have a profound and enduring impact on the home appliance market, consumption patterns, and industrial structure. Naturally, there are both positive and negative ramifications to consider.

In 2025, with a focus on the national subsidy policy, what should home appliance manufacturers prioritize and compete for? Additionally, what new changes will the industry structure and consumption ecosystem face? Furthermore, how will the market, consumer psychology, and behavior evolve?

The home appliance industry recognizes the profound impact of the scrappage and replacement subsidy policy, suggesting that its comprehensive influence should be assessed over a five-year period. While affirming the policy's positive role in enhancing operational quality, profit margins, and structural adjustment for major home appliance enterprises, it's crucial to acknowledge the potential disruptions caused by issues like "unfair market competition" and "premature consumption overdraft".

Upon comprehensively evaluating the impact of the national subsidy policy on the home appliance industry and enterprises, the sector concludes that it presents "seven merits and three hidden dangers." It's essential to recognize the policy's role in "turning the tide" during a period of economic and industrial change, while also preparing for potential post-policy impacts and disruptions.

Seven Merits: Facilitating Industry and Enterprise Restructuring

Launched in September 2024 and continuing through 2025, the national subsidy policy has a positive stimulating effect on the home appliance industry and its leading manufacturers, particularly amidst external economic adjustments and sluggish consumption. This policy aims to help manufacturers stimulate demand, accelerate shipments, and improve operational efficiency.

Specifically, the value of the national subsidy policy lies in its impact on major enterprises and merchants in the home appliance industry, manifesting in three key areas:

1. Raising Industry Barriers and Accelerating the "Matthew Effect": The policy will certainly accelerate the concentration of market share and mainstream consumption towards big brands, channels, and platforms, encouraging capable manufacturers to provide superior user services and uncover business opportunities through "user management".

2. Enhancing Operational Quality and Structure Optimization: By subsidizing level 1 and level 2 energy-efficient products, the policy focuses on improving the operational quality and profitability of major home appliance enterprises and merchants. It also encourages manufacturers to invest more in high-quality projects and orders for in-depth exploration.

3. Promoting Systematic Innovation: The policy aids major home appliance enterprises in systematic innovation, not only at the product level but also in marketing, user service, and channel models. This fosters more user-centric mode, means, and content innovation, moving beyond low-price sales and commercial involution.

4. Stimulating Market Consumption Vitality: It encourages users who "can consume but hesitate" to boldly replace their old appliances and embrace a new lifestyle. Through "government endorsement and fiscal dividends," it stimulates the active consumption and desire of more families and users.

Three Hidden Dangers: Unfair Competition and Resource Overdraft

Undeniably, the negative effects of the national subsidy policy on the home appliance industry, enterprises, and consumption will emerge later in the policy's implementation. Especially 2-3 years post-policy, a series of side effects may impact some home appliance manufacturers' market operations.

1. Short-term Overinvestment and Waste of Resources: As the policy accelerates market order concentration towards large and medium-sized enterprises, it may lead to short-term "supply shortages" for some manufacturers, triggering counter-cyclical investments and factory expansions, which could accelerate overcapacity and redundant construction.

2. Triggering "Unfair" Competition: When manufacturers use improper means to "defraud subsidies," it not only disrupts market competition but also leads to a situation where "bad money drives out good money." The policy's "speculative space" may cause more market chaos for some manufacturers.

3. Premature Overdraft of Consumer Demand: This creates a market situation of "living beyond one's means." Over a decade ago, financial subsidies like the home appliance to the countryside program caused many manufacturers to still face the aftermath of "overdrafted consumption" 3-5 years post-policy, with many enterprises and merchants struggling.

It's both an opportunity and a challenge, a benefit and a risk. Facing this national subsidy policy, the home appliance industry will continue to experience volatile trends. The industry believes that:

1. Manufacturers should face the policy positively, actively compete, and turn it into a driving force for enterprise development and transformation, leveraging the momentum for growth.

2. In response to policy impacts and changes, enterprises should play to their strengths, manage users proactively, and compete for orders in the first-tier market.

3. To address potential longer-term "after-effects" of policy withdrawal, enterprises should take precautions and advance their capacity building as "ballast stones and stabilizers".

Declaration: Original article from the home appliance industry. Strictly prohibited from reprinting without authorization.