China is entering into a peak period of home appliance disposal
Although the COVID-19 outbreak heavily impacted the Chinese home appliance sector, the industry saw a gradual recovery in March. According to People.cn, the Chinese home appliance market recorded retail sales of RMB248.6bn in 2Q20, up 2.64% YoY and doubling that of 1Q20, despite an overall contraction of 14.13% YoY to RMB369bn in 1H20. According to data from Sohu, as of June this year, the ownership of household appliances in China exceeded 2.1bn and a considerable number of households purchased their home appliances during the policy stimulus period from 2007 to 2013. From 2007 to 2013, Chinese regulatory authorities launched a series of measures to encourage home appliance consumption, such as providing affordable products to rural households, offering subsidies for urban residents to trade in their old appliances for new ones, as well as subsidizing energy-efficient household appliances.
Under the safe service life standard of home appliances published by the China Household Electrical Appliances Association (CHEAA) on January 13, 2020, the expected safe, operational life of refrigerators, air conditioners, washing machines, electric water heaters and other home appliances is at most ten years. Based on such an estimate, home appliances sold between 2007 to 2013 are now in replacement or renewal stages. According to Sina, citing CHEAA’s forecast, in 2020, the number of household appliances to be disposed of this year is expected to reach 160m.
The formation of an industrial chain in China is necessary to recycle old home appliances
When China initially released policies to encourage households to trade in their old appliances, there were few licensed, electrical waste processing companies. With the implementation of the policy for nearly a decade, the nation now has 109 qualified firms to dismantle electronic waste with established standardized mechanisms to disassemble and recycle old home appliances nationwide, increasing the reuse rate of recyclable parts. From 2012 to 2018, the output from disassembling electronic waste reached 7.56m tons, of which that with economic value, such as reclaimed copper, aluminum, and plastic, amounted to 3.3m tons, accounting for 43.7% of total scrapped waste.
The output from disassembling obsolete home appliances helps replenish resources in the country and contribute to a circular economy. On the other hand, if junk appliances are not properly processed, it may cause serious environmental pollution and the cost of fixing such problems might be far greater than the value of the appliance itself.
Although more professional entities in China have started recycling old household appliances, such as retail sales platforms, specialized recycling companies, and local government bureaus, more than two-thirds of the country’s household appliances are still recycled through social channels. Elderly individuals mainly establish such channels, under which they directly purchase obsolete appliances from households, recycle some parts after simple dismantlement work and then throw away the remaining parts. Such a process poses significant environmental risks and leaves some valuable parts and materials unutilized.
In May 2020, seven Chinese authorities, including NDRC, MIIT, MoHURD, and more, jointly published an implementation plan to improve China’s appliance recycling system. Through the initiative, the Chinese government aims to significantly boost the number of home appliances recycled through standardized channels within the next three years. However, a specific quantitative target is not yet available. According to Xinhuanet, in 2019, qualified firms processed 82.76m discarded electric appliances, accounting for around half of the total waste.
China begins encouraging purchases of green home appliances
As China experiences a peak period of replacing old home appliances, an increasing proportion of the population has been buying intelligent home appliances, with functions such as WiFi, voice interaction, near field communication (NFC), a camera, etc. Taking this opportunity, China has launched supportive policies to encourage households to purchase smart and green home appliances. In early 2019, ten Chinese government departments jointly released an implementation plan to promote the retail sales of intelligent and green household appliances. Specifically, the Chinese government would provide subsidies for the general public to buy energy-efficient home appliances, such as variable-speed air conditioners, refrigerators, washing machines, and flat-screen TVs. According to Xinhuanet’s estimate, if the aforementioned subsidy policy expands to all regions in the Chinese Mainland, it will boost the consumption volume of energy-efficient home appliances by 150m between 2019 to 2021, with a value of RMB700bn.
Because of COVID-19 disruptions to economic development, during the State Council executive meeting earlier this month, the top Chinese government department also proposed to increase support to the green and smart home appliance sector as part of a strategy to revive the national economy. Again, analysts anticipate that local governments will distribute subsidies for people to trade in their old appliances and buy more environmentally friendly ones, though detailed implementation schemes are not yet available. Previously, in 2008 and 2009, the Chinese government also initiated subsidy policies to boost consumption of home appliances, aiming to counter the impacts of the global financial crisis. During that period, the country recorded a total home appliance sales volume of 92.48m, with a value of more than RMB342bn.
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