A colleague and I spent the early part of this week in Yuexi Town and Henghe Village in Anhui province. I was there to speak to local farmers about their opinions on Beijing’s attempts to boost rural consumption. People in rural areas are being offered rebates on a select number of products, including home appliances, TVs and computers (the exact subsidy varies by region) and it’s one part of China’s major stimulus package to ride out the global economic slowdown.
Unfortunately, the farmers’ responses weren’t that promising. Those farmers that can afford to buy appliances say that the subsidy program is only causing them to bring consumption forward, and even then only if the exact brand they want is on the list. Farmers aren’t a group open to conspicuous consumption – they’re only going to purchase something they need and if it meets their quality standards. The most common products on farmers’ wish lists: TVs and refrigerators. That might be bad news for Lenovo and its new rural laptops.
If farmers can’t get a high-quality product, they’d rather wait until they can afford what they want than buy something that is of inferior quality – even if it does come with a rebate. That’s good for individual farmers who won’t get stuck with malfunctioning washing machines, but it means this program isn’t going to be the short-term savior Beijing makes it out to be.
Now, about that rebate. Farmers we talked to this week who have purchased products said they’d applied for the rebate successfully, but that the rebates haven’t been issued yet and nobody knows when they will be. If farmers don’t see the rebates they’ve been promised, those that can afford to buy are less likely to buy more and those who are thinking about it aren’t going to take advantage of the program at all. That’ll make things even worse for Beijing’s economic program.