Haier Group, parent of Haier Electronics (1169.HK) and Qingdao Haier (600690.SH), said it signed a cooperation agreement with General Electric (GE.NYSE) to sell GE domestic appliances in rural China. According to Yang Mianmian, Haier Group president, the company began to sell and distribute GE goods last year as government subsidies boosted white goods sales nationwide.
With appliance sales up 30% in rural areas in 2009, Haier was a major beneficiary of Beijing’s preferential policies, which include a scheme where rural households receive subsidies as part of an “old-for-new” trade-in scheme. “[GE] noticed that we have built an excellent rural sales network,” Yang said, adding that the Shandong-based company is expecting a further 30% increase in rural sales this year.
As export markets have yet to recover to pre-financial crisis levels, China’s white goods makers continue to depend the government to stimulate domestic consumption. The deal with GE to sell the US firm’s products highlights the importance of rural markets in creating new avenues for sales growth. While no such agreements are expected from competitors Midea (000527.SZ), Hisense (000921.SZ) or Gree Electric Appliances (000651.SZ), domestic appliance makers will be looking to improve sales and distribution networks to reach rural areas while government policies last.