Shanghai stimulus plan helping companies grow and invest with updated equipment
Shanghai’s distinctive skyline at dawn, including the Huangpu River. The metropolis has established a reputation as a popular foreign investment destination. CHINA DAILY
Shanghai’s economic stimulus package that promotes large-scale equipment renewals and consumer goods trade-ins has helped boost investment growth and unlock consumption potential.
In March, the State Council launched a plan to promote large-scale equipment upgrades and old-for-new exchanges of consumer goods.
This was followed by a measure in July where the government allocated around 300 billion yuan ($41.44 billion) in long-term special government bonds to support these initiatives.
Shanghai introduced a four-year action plan (2024-27) in April to promote equipment renewal in 10 sectors.
These include energy, construction, traffic and manufacturing, as well as four types of consumer goods trade-ins including home appliances, vehicles and home decoration to support the national initiatives.
In September, the city released a series of measures aimed at intensifying support for the trade-in programs.
According to the Shanghai Commission of Commerce, with an incentive policy encouraging the trade-in of old vehicles for new ones, the city received more than 100,000 applications for vehicle scrappage and renewal by Nov 28, generating more than 20 billion yuan in new vehicle sales revenue.
The consumption market in Shanghai has remained stable and is displaying signs of recovery.
Total retail sales of consumer goods increased by 10.9 percent year-on-year in October, a significant turnaround compared to the 4.3 percent year-on-year decrease observed in September.
Unlocking potential
Shanghai Rinnai, established in 1993 as a Sino-foreign joint venture, has experienced rapid growth in the last 30 years. It has been leading industry innovation and is a pioneer in bringing the latest technologies to consumers.
According to Jiang Ying, chief operating officer based at the sales, marketing and services headquarters of Shanghai Rinnai, the challenges in China’s property market have led to decreased demand for kitchen appliance businesses including Rinnai.
“We had already come to terms with these results this year. However, with the aid of trade-in policies and additional benefits from e-commerce platforms, our sales figures during the Double 11 shopping festival exceeded our expectations,” Jiang said.
“I believe this success is not solely attributed to Rinnai’s craftsmanship and dedication but also significantly aided by the robust support to promote the replacement of home appliances,” he added.
Jiang said that the benefits of supportive policies extend beyond mere sales growth. They also enhance brand awareness among consumers and encourage brands to upgrade and develop products with a focus on sustainability, energy efficiency and smart technology.
“These efforts further bolster business competitiveness,” he said. “With the government subsidies, we not only achieved significant demand for popular products such as gas water heaters and wall-mounted boilers but also experienced an increase in sales for heat pumps, kitchen equipment and home appliances.”
In August, Rinnai relocated its product demonstration hall on West Nanjing Road in Huangpu district of Shanghai, which was built more than 20 years ago, to a new flagship experience center in Xuhui district.
The center showcases Rinnai’s latest products such as kitchen appliances, water heaters, heating systems, water purification systems and heat pump systems. Rinnai’s latest technological achievements in intelligence, energy efficiency and comfort are displayed there.
“This upgrade is founded on Shanghai Rinnai’s deep understanding of the current market environment and its strategic vision for the brand’s long-term development,” Jiang said.
“The center is designed to showcase the most advanced products and technological innovations while providing consumers with a spacious shopping experience. The new center features a display area of nearly 1,000 square meters and recreates home space scenes, offering consumers an immersive experience,” he said.
Jiang said that in upcoming years, Rinnai will closely follow new trends and offer products based on consumer demand.
“The Chinese market is vast and teeming with potential; a consensus that has been reached within the industry. As a brand, our focus should be on innovation fueled by user needs. It is through this approach that we can effectively meet the constantly evolving demands of our customers,” he said.
Jiang also shared his thoughts on how to further promote consumer goods trade-ins in China. He said that the renewal policy promotion needs the participation of all relevant parties such as gas companies and governments. Gas companies can take a more active role in educating consumers on safety, while the government could attach more attention to raising awareness of the safety and energy efficiency deficiencies of old household appliances.
“There is also a need for ongoing subsidies for replacing old items with new ones, continuously stimulating Chinese consumers’ willingness to upgrade and reducing their replacement costs,” Jiang added.
Shanghai Rinnai’s expansive production facilities. [Photo provided to China Daily]
Boosting demand
The implementation of equipment renewal plans in Shanghai also covered elevators used in high-rise buildings, which created new demand in the market.
In the early 1990s, the first batch of commercial residential buildings equipped with lifts in Shanghai welcomed their owners. Since then, the number of such buildings has increased.
By the end of 2023, a total of 325,653 elevators were operational in Shanghai, ranking the city first globally. Among these, more than 154,519 elevators had been installed in residential buildings, according to a report on elevator safety released by the Shanghai Administration for Market Regulation in May.
The report also highlighted that the issue of “aging elevators “needs to be addressed. In Shanghai’s residential buildings, more than 46,000 elevators have been in operation for more than 15 years, and nearly 19,000 had been in use for more than 20 years.
To tackle aging elevators, Shanghai has been promoting the replacement or upgrading of elevators in the city by offering subsidies. The replacement subsidy for an elevator in residential buildings that has been in operation for more than 15 years was raised to 150,000 yuan this year, while the upgrade subsidy stands at 50,000 yuan each.
Marohn TK Elevator, formerly known as Marohn ThyssenKrupp Elevator, has been assisting in elevator replacements in Shanghai with its innovative and high-quality products and services.
According to Lu Yaning, CEO of Marohn TK Elevator, moving forward with replacement or upgrade plans for old lifts in some residential communities can face challenges. These include difficulties in raising funds, a lack of consensus among residents due to varying usage, particularly from residents on lower floors, as well as issues related to equipment management and maintenance.
The company said that the government policies regarding lift replacements have helped boost elevator sales, enhanced brand awareness, expanded its market reach and fostered partnership development.
“The government’s subsidies will significantly reduce costs for property owners, making elevator renewal plans more appealing to a wider audience,” Lu said. “The introduction of new lifts will also bolster the after-sales service market. Furthermore, businesses will continue to innovate and introduce new products to meet evolving demands.”
Lu also said that the supportive policies create additional opportunities for forming partnerships with governments and industries such as construction, finance and property management. These collaborations can play a crucial role in assisting businesses to achieve long-term objectives.
Marohn TK Elevator’s premises in the Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone. [Photo provided to China Daily]
With regard to its future development in China, Marohn TK Elevator gives the Chinese market a vote of confidence. The company relocated its research and development center, as well as production facilities, to Shanghai’s Lingang area in 2015.
“Marohn TK Elevator’s export business has grown at an annual rate of 20 percent,” said Lu.
“Entering the 21st century, Shanghai’s endeavor to build a deep-water port to bolster its status as an international shipping hub has propelled the development of Lingang.
“In 2001, the Yangshan deep-water port project received government approval. In June 2002, construction of Lingang New City commenced as an integral part of the Yangshan port. The establishment of the Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone in 2019 marked a significant milestone in the area’s development.
“Marohn TK Elevator chose Lingang not just for its business opportunities but to showcase our confidence in the development of Pudong New Area, Shanghai and China,” said Lu.
Lu said that China’s elevator industry will continue to be attractive to global elevator producers despite current uncertainties.
“The restructuring in the elevator industry is gaining momentum: subsidy policies are drawing in more companies to engage in the market for modernizing old elevators, intensifying competition and spurring companies to improve product quality, technological prowess and service capabilities,” Lu added.
“This momentum is fostering industry consolidation, potentially resulting in the phasing out of weaker players. In the years ahead, the elevator industry will have substantial developmental prospects, while traditional sectors will grapple with challenges in transitioning and upgrading,” he said.
,https://english.shanghai.gov.cn/en-Latest-WhatsNew/20241212/9a5665f72daf4bfb90e7f048dc8e5421.html