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China's "Home Electronics Down to the Country Side" policy—The PC business opportunities, states DRAMeXchange

4 March 2009 Semiconductors

Taipei, Feb 24th, 2009--- According to DRAMeXchange, to expand domestic demand to compensate for the decrease of export, Chinese government started to advocate the policy of “Home Electronics down to the country side” in December 2007. Through purchasing designated home electronics, Chinese government will compensate 13% and encourage farmers to consume. Reason is to decrease the gap between the cities and the country, secondly is to stimulate domestic demand and compensate for the decrease of export and maintain economic growth momentum of the country.

Following the process of the policy, PC will be one of the designated products of the 2009 “Home Electronics Down to the Country Side” since the Chinese government is increasing the popularity of internet usage nation-wide, mobile phone and PC are the necessary device for access. Especially the Chinese government has been aggressively promoting e-mail, electronic information in the country, and enabling internet access in every village. Therefore, PC will be the next product to go into the country side after mobile phone.

According to the Chinese government data, the internet users of China reached 298 million in 2008 and the popularity is 22.6%, which was slightly higher than the global average 21.9%. By device, the number of broadband user reached 270 million and the number of mobile phone internet user was 112 million. The prior accounted for 90.6%. If sorted by population type, the number of country side user was 84.6 million, which was 28.5% of the total internet user population, but only accounted for 11.9% of the country side population in China.

Severe computerization popularity (information popularity) lag exists between the cities and countries in China. The Chinese government has been aggressively improving the living quality of country villages to minimize the gap. According to the data of the National Bureau of Statistics of China, the country households have gradually stepped into electrical and informational era in the recent years. Back in 1978 there were almost no home electronics in the country families, but in 2007, the numbers of TV, refrigerator, and washing machine per hundred country side households reached 106.5 units, 26.1 units, and 45.9 units respectively. About the information products, home phone, mobile phone, and personal computer per hundred country side households reached 68.4 units, 77.8 units, and 3.7 units respectively.

No matter whether it’s the internet or PC popularity, computerization of the country side is far lower than the costal cities. With the help of high country side population and the government policy, the future PC market is full of potentials. The “Home Electronics Down to the Country Side” policy will last for four years this time, there is expected to be 6 million units of PC demand in 2009 with the production revenue of 12 billion RMB. The PC shipment will increase 16% while comparing to the 2008 number, and the production revenue will increase 5% (the unit price is estimated with the lowest of 2000 RMB). While facing the uncertainties of economy, such demand really gives vendors hope of business growth.

Figure-3 The Popularity of Durable Goods of Country Side Household in China, 2007

106.5 units
Home phone
68.4 units
26.1 units
Mobile phone
77.8 units
Washing machine
45.9 units
Personal computer
3.7 units

Unit: hundred households
Source: National Bureau of Statistics of China, compiled by DRAMeXchange, Feb. 2009

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