The exchange of old appliances for new ones is undoubtedly a promising incremental market. As a populous country, China has a huge market for durable goods such as automobiles and household appliances, which contains huge potential for upgrading and upgrading. There is great potential for exchanging old for new consumer goods. In 2023 alone, over 200 million household appliances were scrapped.
However, at the same time, the trade in of consumer electronics also faces issues such as inadequate standards, high costs, and cumbersome processes. In response to this, in March this year, the State Council issued the Action Plan for Promoting Large scale Equipment Renewal and Consumer Goods Exchange (hereinafter referred to as the Action Plan), which pointed out that promoting large-scale equipment renewal and consumer goods exchange is an important measure to accelerate the construction of a new development pattern and promote high-quality development. It will effectively promote investment and consumption, which is not only beneficial for the current but also for the long-term. The document also proposes that by 2027, the amount of recycled household appliances will increase by 30% compared to 2023, and the proportion of recycled materials in resource supply will further increase.
In response to the Action Plan, on the afternoon of April 26th, JD Group (09618. HK, hereinafter referred to as "JD") announced the establishment of the "JD Home Appliance and Home Furnishing Alliance" with 100 home appliance and home furnishing brands such as Haier, Gree, and Midea, and worked together with 20 provinces and cities to gradually implement subsidies for exchanging old for new, promoting the business of exchanging old for new home appliances and home furnishings.
According to JD.com, it will provide exclusive preferential subsidies, and consumers who purchase household appliances, home building materials, and other products on JD.com will receive subsidies and reductions; At the same time, we will cooperate with local governments to launch subsidy special events, which will help consumers in various regions to purchase home appliances and home products more cost-effective and worry free through government subsidies, corporate concessions, and other means.
"According to relevant national departments' calculations, there are currently about 3 billion units of household appliances in China. At the same time, we see that about 200 million old appliances are recycled each year, and about 80 million old machines flow into dismantling factories. Therefore, these recycled old appliances have not been converted into new machines for purchase." The head of the service business of JD Retail Home Appliance and Life Business Unit told China Business Daily reporters, "Now, under the guidance of national policies and the promotion of relevant media, we see that consumers have become conscious of exchanging old for new home appliances. Currently, JD has more than 200 sub categories of" old for new "products, with a total of over 200000 users." There are tens of millions. This cannot be achieved without the strong support and assistance of relevant national departments, provincial and municipal governments at all levels, industry associations, and brand partners
Concept of top-level design
The reporter saw on the Chinese government website that officials from the National Development and Reform Commission have evaluated the market size brought about by large-scale equipment and consumer goods trade in: "By the end of 2023, the number of civilian cars and household appliances will reach 336 million, and the number of household appliances will exceed 3 billion. The replacement of automobiles and household appliances can also create a trillion yuan market space. Promoting large-scale equipment updates and consumer goods trade in can continuously increase the proportion of advanced production capacity, allowing more high-quality and durable consumer goods to enter residents' lives. This can not only promote consumption and investment, but also increase advanced production capacity, improve production efficiency, and promote energy conservation and carbon reduction, reduce safety hazards, which will benefit both enterprises and the people. This will be a huge annual scale of over 5 trillion yuan." Market. "
According to the Action Plan, by 2027, the scale of equipment investment in industries, agriculture, construction, transportation, education, cultural tourism, medical and other fields in China will increase by more than 25% compared to 2023. The energy efficiency of major energy consuming equipment in key industries has basically reached the energy-saving level, and the proportion of production capacity with environmental performance reaching A-level has significantly increased. The popularization rate of digital research and development design tools and the CNC rate of key processes in industrial enterprises above designated size exceed 90% and 75%, respectively. The recycling volume of scrapped cars has increased by about twice compared to 2023, the trading volume of used cars has increased by 45% compared to 2023, the recycling volume of waste household appliances has increased by 30% compared to 2023, and the proportion of recycled materials in resource supply has further increased.
Among them, the Action Plan proposes to carry out the trade in of durable consumer goods such as automobiles, household appliances, and home furnishings, promote the consumption of cars in a tiered and updated manner, organize nationwide promotion activities for car trade in, and eliminate old cars that meet mandatory scrapping standards in accordance with laws and regulations. Smooth the updating of the consumption chain for household appliances, encourage and support consumers to exchange old appliances for energy-efficient ones. The Action Plan also requires support and guidance from policies such as finance, taxation, finance, and investment to encourage enterprises to carry out trade in activities, unblock circulation bottlenecks, orderly guide tiered and updated consumption, and create new market demand.
"It can be seen that the goal of this' Action Plan 'is not only to meet consumer demand and promote manufacturers and merchants to sell goods, but ultimately to point to the transformation and upgrading of China's manufacturing industry and the iterative updating of technological energy conservation, which is a good thing for the country and the people." Ji Weimin, Deputy Director of the Institute of Industrial Economics at the Chinese Academy of Social Sciences and President and Editor in Chief of China Business Daily, said.
It is worth noting that the trade in proposed in this Action Plan is market-oriented.
In the view of many industry insiders, this not only conforms to the current market development status, but also conforms to future trends.
The 2024 China Home Appliance Retail and Innovation White Paper, jointly released by China Home Appliance Network and Aowei Cloud Network, shows that China's home appliance market has shifted to user led. "Driven by the dual circulation strategy, the overall production and sales of the home appliance industry are thriving, with a positive trend. The domestic home appliance market demand is experiencing a slow recovery, but the momentum for growth is significantly insufficient. It is expected to see a slight growth of 0.6% for the entire year of 2024," said Wen Jianping, Chairman of Oviyun
This also means that the exchange of old for new in the stock market of household appliances will be a new driving force for the future development of the market.
"It can be seen that the country has made great efforts and determination in the policy of exchanging old for new, and it is explicitly mentioned that the market should be the main focus." The service business head of JD Retail Home Appliance and Life Business Unit told reporters, "JD has taken action and made efforts to adjust the entire online policy to match the local government's policy of exchanging old for new."
Improve and streamline the entire industry chain of exchanging old for new
The reporter learned during the interview that in addition to recycling and transporting consumers' old household appliances, the trade in of household appliances also faces specific details such as the dismantling of old products and the demand for integrated services when consumers update products.
"In fact, the main requirement of consumers is integration. This not only involves receiving old appliances, but also involves complex dismantling and installation of new products." The service business head of the JD Retail Home Appliance and Life Business Unit said, "Currently, consumers have a clear demand for exchanging old appliances for new ones. Firstly, they require merchants and platforms to dismantle old appliances for free; secondly, the replacement process is simple; thirdly, they need to send new appliances for dismantling and old appliances synchronously. More importantly, due to the disposal of residual value of old appliances and homes, this also requires merchants and platforms to provide sufficient subsidies."
From the perspective of the entire chain of exchanging old for new, when recycling old household appliances, it is necessary to go through five steps: dismantling, handling, transportation, storage, and re transportation. In addition, it is necessary to dismantle old products and generate new production materials. This not only involves a large amount of investment from merchants and platforms, but also requires relevant departments to develop corresponding operational norms and industry standards.
In response, the Action Plan proposes to accelerate the development of the "replacement+recycling" logistics system and new models, support the construction of reverse logistics systems for durable consumer goods production and sales enterprises, or cooperate with professional recycling enterprises to collect waste consumer goods on site. Further improve the recycling network of renewable resources and support the construction of a number of centralized sorting and processing centers. Improve the recycling channels for office equipment in public institutions. Support the development of online trading platforms for waste products and equipment. In addition, we will improve the support policies for the disposal of discarded electrical and electronic products, and research and expand the coverage of the disposal system for discarded electrical and electronic products. Support the construction of a batch of industrial clusters for deep processing of recycled resources such as scrap steel, non-ferrous metals, and plastics. Actively and orderly develop biomass liquid fuels mainly made from discarded fats and non grain biomass. Explore the construction of an information-based traceability system for the use of recycled materials such as recycled plastics and recycled metals that comply with international standards. Continuously improve the technological level of waste non-ferrous metal utilization and strengthen the research and application of rare and precious metal extraction technology. Timely improve import standards and policies for retired power batteries, recycled materials, etc.
Under the guidance of policies, enterprises are also actively exploring specific implementation solutions for details. The person in charge of the service business of JD Retail Home Appliance and Life Business Unit mentioned above told reporters that JD will cooperate with brands and service providers with the ability to dismantle old products, simplify the process of exchanging old products for new ones, proactively understand the process of consumers exchanging old products for new ones, and visualize the recycling process.
"As early as 2016, JD.com launched a" trade in "service for home appliances. Since 2023, more than 16 million users on the JD.com platform have purchased home appliances and home goods through trade in, with the number of first-time trade in users increasing by 200% year-on-year. Search terms such as" trade in "and" home appliances trade in "have also increased by 320% year-on-year. With the support of relevant policies and JD's active efforts, we expect the number of users searching for related keywords to increase by 300% year-on-year in 2024, the number of trade in users will exceed 20 million, and the transaction volume facilitated will reach about 40 billion yuan." The person in charge of the service business of JD's retail home appliance and home life business unit predicts, "This is..." A very challenging goal, but we are confident that we can achieve it