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China’s Energy Saving Program Pushes LCD TV Market to Larger Sizes

Recent rumors suggest the current subsidy program for energy saving appliances, which is scheduled to end in May 2013, will be replaced by a second generation program soon after expiration, with a higher EEI (Energy Efficiency Index), new size group splits, and new subsidy standards by size group. Indications are that the new program will last for another 4 years from June 1, 2013, a much longer term than the current program has run.

The 1st generation energy saving index assigns subsidies to different screen size groups as follows:

China Energy Saving Subsidy (Unit: RMB)

The industry is buzzing about the new EEI criteria, which seems to favor larger sizes like 46” and above. The information shows that the EEI criteria for the new program could be as follows:


Our industry checks show that the 6 billion CNY budget of the current energy saving subsidy program was increased to 10 billion CNY by the end of 2012, after the Chinese government decided to raise the budget allocated to FPD TVs. This indicates that there is flexibility under the total budget of 26.5 billion CNY for all 5 home appliance categories. The increased budget allocation for FPD TVs helps TV sales, especially for local brands and panel makers. In the first round, 32” and 42” benefitted most from the structure of the program, and gained the most share of the three size groupings (19’’-31’’, 32’’-41’’ and 42” and larger).

It will be very interesting to see the higher EEI requirement against higher cost new products like UHD and D-LED, and whether the new subsidy program will encourage LCD TV makers to move towards larger sizes, especially for 46” and 36.5/37”, while 32” and 42” will have less support.

There is still a risk that the Chinese government will not allocate increased budget towards FPD TV due to excessive expense in the 1st program, but the EEI request will be a mandatory policy applied to all FPD TVs.

It is understandable that the government is looking to help out the TV industry, which has undergone a slowdown in recent quarters. There have been concerns about the impact on the market from the expiration of the current program without a replacement program in place. In the case of Japan, once the subsidies ended, demand fell dramatically, though it is not likely that the impact would have been as severe in the case of China. The impact from the most recent rounds of the latest subsidy program have seemed to be having less effect on demand stimulation and resulted primarily in more push from the supply side.