Air conditioner sales declined in China for the first time in 16 years, and dozens of brands have disappeared from the market, according to a white paper released by the State Information Centre (SIC).
The merger of enterprises will go further next year, the report said.
The white paper, on the air conditioner retail market in key cities this year, shows that the sales volume decreased by 7.24 per cent, and sales revenue declined by 1.98 per cent. This is the first time the sales of air conditioners dropped since monitoring began in 1991.
Apart from the decline of the domestic and international markets, the rise of energy and raw materials prices increased the cost of manufacturing and further narrowed the profit margin. The price of copper, for instance, has risen from less than 30,000 yuan (US$3,750) per ton at the end of 2005 to more than 80,000 yuan (US$10,000). That, in turn, has increased the cost of each air conditioner, which on average needs 6 kilograms of copper, by 200 yuan (US$25) to 300 yuan (US$37.50).
The market decline and fierce competition have forced many brands to recede from the market. The white paper said 52 brands are being monitored by the State Information Centre this year, compared with 69 in 2005.
Despite the overall downturn, the demand for products using advanced technology that perform multiple functions keeps increasing. The latest SIC data show that the sales volume of higher-end air conditioners increased by 47 per cent, whereas that of air conditioners priced below 1,500 yuan (US$187.50) declined by 46 per cent.
The major manufacturers have sensed the trend and started to shift their focus to technological innovation and the development of multifunctional products. Haier, the leading air-conditioner manufacturer in China, recently announced that next year it would start to manufacture new products that emphasize on air cleaning and humidity enhancing functions besides its cooling and heating functions.
