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Price War Looming up, Air-Conditioner Producers Form a Price Cutting Alliance
Following last year's bottom-line set by nine color TV enterprises for a unified price reduction, this year sees the Ningbo-based Aux take the initiative in calling for a price-cutting alliance among 19 domestic air conditioner producers, including such heavyweights as Haier, Chunlan and Xiaoya.
Enterprises invited by Aux are all those claimed to have the certificates granted by the State Bureau of Quality and Technical Supervision for being exempt of quality examination. Price reduction includes reasonable price cutting and price war, says general manager of Sanxing Aux. Reasonable price cut is part of a sound competition for market shares after enterprises have sharpened its competitive presence by making full use of its resources to enhance management and production and lower costs. The benign competition serves to weed out cautiously and steadily incapable enterprises to achieve a bettered market structure.
Air conditioner will surely bear the brunt of 2001's warfare among electric appliances for it is of the lowest coverage in Chinese households. China's market capacity for air conditioner is somewhere around 12m in number, only 50 percent that of the color TV. However, the popularity of color TV has come to over 90 percent of families in urban area yet in rural areas 50 percent only. Whereas the occupancy of air conditioner so far hasn't come to 20 percent in the city, not to speak of the rural markets. Though on the other hand, China's hundred air conditioner enterprises turn out a total of 22m sets of air-conditioners, most families are still hesitant to buy one for it is priced too high, leaving a "gap" of 10m in the market. Therefore one of the most effective means for larger consumption is to lower the price to an affordable level for most of the people.
Before this, Chunlan had announced an overall and drastic price cut for its wall-mounted ones of nearly 40 specifications, some of them being cut by a large margin of some 500 to 1000 yuan. Kelon had informed its agents to slash its supply prices and Huabao to cut by 150 to 600 yuan. And they were followed up by Midea and Gree to offer discounts to split-type conditioners.
An overall price war may thus be triggered off this year, says Beijing Evening News.
By PD Online Staff Li Heng
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