How China’s TV Subsidy Program is Stabilizing LCD Open Cell Prices

The Chinese government has announced the start of a new subsidy on purchases of TV and consumer electronics goods. The subsidy program has successfully stimulated TV demand in China and stabilized the prices of LCD TV open cells, which have dropped drastically in 3Q24. David Hsieh, Senior Research Director from Omdia’s Displays group discusses further in his latest blog.

In August 2024, the Chinese government announced a new subsidy on TV and consumer electronics goods purchased in China. The subsidy program started in September and will be effective until 1Q25. Part of efforts to stimulate home appliance consumption and promote energy saving, the subsidy program is called the Home Appliances Swap Old For New (家电以旧换新) program. 

This program aims to engage the central, local government, and capital to collectively subsidize consumers who purchase new home appliances, including TVs, PCs, refrigerators, and washing machines, that meet China’s new energy-saving standard. The subsidy can be 15–20% of the tagged prices, depending on the energy-saving levels. 

The program was announced on the Government of China’s website (Figure 1).

The program has successfully stimulated TV demand in the Chinese domestic market with consumers  rushing to shopping arcades to purchase new TVs with their subsidized benefits. As a result, TV makers like Hisense, TCL, Skyworth, Konka, and Changhong are raising their LCD TV open cell purchase forecasts and production plans for 4Q24. 
The Home Appliance Swap Old For New (家电以旧换新) program can be summarized as follows: 

• The central government has allocated Y300bn ($42bn) for four phases from 2H24 to 1H25. This allocation will be fully utilized within this period. 
• Eight home appliances and consumer electronics goods—refrigerators, washing machines, PCs, TVs, air conditioners, heaters, kitchen stoves, and range hoods—will be subsidized.
• All newly purchased home appliances and consumer electronics goods must meet either Label (Level) 1 or Label 2 of the China Energy Label standard. As shown in Figure 2, the energy label is defined by power or energy consumption, with Label 1 representing the lowest energy consumption products and Label 5 the highest. The subsidized items include consumer electronics goods labeled as China Energy Label 1 and Label 2. 
• For Label 2 products, 15% of the purchased price will be subsidized, while for Label 1 products, 20% of the purchased price will be subsidized. The maximum subsidy per unit is Y2,000 ($280).

The new subsidy program has effectively stimulated domestic demand for LCD TVs, as evidenced by the following signs:

From TV sell-through side: 

- During the China Regional Holidays Week from October 1 to 7, the sell-through of LCD TVs saw a double-digit growth rate year-over-year (YoY) as consumers flocked to shopping venues to purchase new TVs.

- The 65-inch and larger-sized TVs are selling well because they mostly comply with the energy savings standards. Additionally, the subsidy amount is based on 15% or 20% of the TV’s price tag so that consumers can receive more subsidies for higher-priced TVs.

- There should be another sell-through growth during the Double 11 (November 11 week) shopping season. 

From TV makers’ side: 

- TV makers who are targeting the Chinese domestic market, such as Hisense, TCL, Skyworth, Changhong, Konka, and Xiaomi, are all increasing their LCD TV open cell purchases and TV set production plans in 4Q24. 

- Hisense increased its LCD TV sales target in China in 4Q24 from 2.5 million units to 3 million units. Hisense also has increased its LCD TV open cell purchase plan in 4Q24 from 6.3 million units to 7 million units. In other words, Hisense’s 4Q24 plan increased by 30% thanks to this special stimulus program. 

- TCL increased their LCD TV open cell purchases in 4Q24 from 6.5 million units to 6.6 million units. Meanwhile, TCL increased its 4Q24 TV sales target in China from 2.0 million units to 2.2 million units. 
- Xiaomi increased its 4Q24 TV sales targets for China by 0.2 million units. 

- In the case of Hisense, its shipment forecast for the Chinese market in 4Q24 was initially planned at 2.3 million units and was slightly increased to 2.5 million in September 2024. However, it is now forecast to be 3.0 million units, which is about 30% higher than the initial plan.

- Similarly, other top-tier Chinese TV brands, such as Skyworth, also have an increased shipment forecast for 4Q24.

- Many TV makers are adjusting their TV products to comply with Label 1 or 2 of the China Energy Label standard by using backlight dual brightness enhancement films (DBEFs). This allows them to avoid redesigning the TV backlight by reducing the LED numbers, which would lower power consumption. The DBEFs improve brightness efficiency, leading to reduced power consumption under the same brightness conditions. 

Chinese TV market forecast:

- The Chinese domestic TV market might be the most variable market, due to economic growth fluctuation as well as the involvement of the government policy, particularly the subsidy or stimulus program. 

- China TV makers and panel makers estimate that the new “Home Appliance Swap Old For New” (家电以旧换新) program will help to increase the China TV market demand by 1.5 million units to 2 million units.

- However, some TV and panel makers are concerned that the current strong demand for TVs may be short-lived, with doubts surrounding the demand that is mostly coming from pull-in. For example, consumers who originally planned to buy a new TV in 2025 or 2026 might be incentivized to make the purchase now to replace their old sets meaning they may not need to buy any more TVs in the next few years. Similar pull-in effects for home appliances and consumer electronics were observed during and after the COVID-19 pandemic. Now, consumers are worrying  whether the Chinese government can keep subsidizing the purchases each year from a financial balance perspective.

Chinese TV market: 
• 53–55 million units per year (2018–19)
• 47 million units/year (2020)
• 42–43 million units/year (2021–2022)
• 38 million units (2023)
• 37–38 million units/year (2024–25)
• 40–41 million units/year (after new subsidy)

The Chinese government announced a new subsidy on TV and consumer electronics goods purchased in China from 2H24 to 1H25. The subsidy is 15–20% of the tagged prices.

Further reading
Display Dynamics – September 2024: Panel makers’ fab utilization rates to drop 14 percentage points MoM to 68% in October 2024 (September 2024) 
Display Dynamics – August 2024: Chinese TFT LCD makers are planning to stop production for two weeks in October 2024 (August 2024) 
Display Dynamics – August 2024: LCD TV panel prices may drop more than expected in 3Q24, affecting the profitability of panel makers (August 2024)
“Notice of the General Office of the Ministry of Commerce and other four departments on further improving the work of old-for-new home appliance replacement,” Government of China’s website (retrieved on October 10, 2024)

To read more insights and analysis covering market trends and industry forecasts prepared by Omdia’s Display practice, click here.