China’s 家电下乡 subsidised purchase of electronic goods for rural areas

China government’s 家电下乡 "subsidised purchase of electronic goods for rural areas" is one of China’s policies to boost internal consumptions.

家电下乡信息管理系统(Information Management System)
The website has information on announcements, laws & regulation, provincial activities, industrial activities etc regarding 家电下乡.

Q&A on the policy:

Questions & answers by China’s Ministry of Finance
Q&A on other website

Some compilations on 家电下乡on websites:
website 1
website 2

The policy is of good intention, subsidising rural folks on purchase of modern electronic goods for improvement of living standard, while providing much needed orders for electronic goods manufacturers to prevent further spread of bankruptcies and unemployment in the industry.

Its effectiveness depends on real needs of rural folks and actual executions of the program.
The devils are in the details.

Examples of concerns voiced (some are already happening), seen from various websites:
1. Unfair competitive pressure and crowding out effect on small and medium companies that models are not selected for the program.

2. Poor rural folks cannot afford to buy even with subsidy.

3. Even if it is affordable, it may not be usable, for example TV in areas with poor reception of TV programs.

4. Even if it is affordable and usable, cost of ownership may be too high, for example electricity bills, maintenance/repair/parts costs, subscription cost (for example TVs) etc..

5. Perception of the models being selected : lower quality goods, obsolete models ?

6. Ease and hidden costs of getting subsidies

7. Fraudulent goods that made to imitate selected models

8. Incentives for rural distributors to promote selected models will not be there if profits are squeezed too thin compared to other not-selected models

You may see that even if a policy is of good intention, its financial outcome depend greatly on the interaction of its different participants and transaction cost/information cost of participants.

1 comment:

  1. Sounds like something that barack obama would do spend money to subsidized the purchase of electronic goods.


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