County-level markets spur recovery with accelerated pace of urbanization

An hour before heading home, after sweating under sweltering heat all day, Sun Pei of Sheyang county, Jiangsu province, has already turned on the air conditioner remotely via his mobile phone to cool down his home.

And that's not Sun's only fancy gadget. There is a 1,000-yuan ($137) robot vacuum in his living room that can help lighten his housework load, a 5,000-yuan oven in the kitchen that allows him to effortlessly enjoy a variety of delicious dishes, as well as a 3,099-yuan projector in the bedroom for movie marathon weekends.

"These small appliances that enable automation at home are very popular in counties, as they are easy to operate, help improve the quality of life and provide a stronger sense of accomplishment," he said.

With the still-unfolding urbanization process in China, counties and county-level cities, which are still embracing a rising number of people adding to censuses, represent major potential to tap into home appliance consumption, according to analysts and executives.

As one illustration, Beijing-based market consultancy All View Cloud said retail sales of air conditioners in county-level markets jumped 17.63 percent year-on-year in the first half, while the corresponding figures in first- and second-tier markets only increased 8.38 percent and 6.27 percent, respectively.

Chen Lifen, a researcher with the Development Research Center of the State Council, said that more job creation buoyed by industry relocation in county-level regions has increased local household incomes and thus shored up their spending power, catalyzing greater consumer market demand.

In the meantime, more brick-and-mortar stores and simpler online buying make it easier for residents of county-level communities to walk in step with their peers in big cities, Chen said, adding that those who work in cities and return to their hometowns during holidays have become an important force in driving home appliance consumption.

In a guideline to promote the consumption of green and smart home appliances, issued by the Ministry of Commerce and three other government departments in late July, the country has pledged more support to further extend home appliance marketing networks in lower-tier markets.

Home appliance production, sales, maintenance and recycling enterprises and e-commerce platforms will be encouraged to set up more outlets and warehouses at county and township levels, according to the guideline.

Traditional home appliances have a comparatively high penetration rate in China, and the current market demand is mostly driven by a desire for renewal and upgrading, said Xu Jianwei, a researcher with the Chinese Academy of Macroeconomic Research.

The life span of home appliances has increased, greatly lengthening the replenishment cycle. New features and functions of household appliances that can increase user experience and quality of life will boost such demand, Xu said.

Intelligence and automation, health awareness, high-quality and big brands are evolving into new consumption trends in the county-level home appliance market, according to a report by retail service provider Suning released in June.

Young people, especially those in county-level regions, are emerging as the driving force for high-end and smart products, said Fan Huaiwei, president of Suning's Retail Cloud, a Suning subsidiary that aims at lower-tier markets in China.

During China's mid-year 618 shopping festival, sales of Dyson hair dryers through the Retail Cloud channel, for instance, climbed 219 percent year-on-year, and sales of large-screen TVs priced over 10,000 yuan surged 480 percent, Fan said.

More development prospects will emerge in this industry as the effects of pro-consumption policies are further brought out, coupled with robust demand in county-level marketplaces, he added.