The recent detection of substandard products involved in the unfolding home appliance subsidy plan for rural Chinese has stirred up a nationwide storm of quality examination.

Foshan city of Guangdong province, for example, a major powerhouse of appliance suppliers to the rebate program, has recently detected more than 300 unqualified electronics products.

Some illegal manufacturers or retailers have been spotted selling disposed appliances labeled with well-known brands, posing potential threats to safety in order to make a profit, according to Nanfang Daily reports.

Implicated products mainly include low-cost electro-thermal ovens, electrical kettles and electric cups.

Foshan is not alone: Other cities and provinces rolling out the rebate scheme also have detected fake or substandard home appliances through local government examinations.

Currently some 60 percent of China's people live in the countryside. According to Peking University forecasts, China's total population will reach 1.4 billion by the year 2020, with about 560 million - or 40 percent - still living in the countryside. Even a one-percent increase in sales could mean a potential gain of 2.38 million yuan. Figures of this magnitude constitute an illegal manufacturer's dream.

According to many local media reports, some enterprises not winning the home appliances bid provide promotions that resemble the government's rebate policy. In some designated sales outlets in Shaanxi province for example, unqualified manufacturers sell products by subsidizing 13 percent of the product price to customers to compete with the qualified manufacturers.

The information imbalance between town and countryside hinders the circulation of goods and capital in these markets. Urban areas have long since embraced the information age, yet most residents of China's villages have been left behind in the Internet age.

To tackle that problem, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) in February urged quality supervision departments at all levels to strengthen supervision and inspection of appliances designated for sale in the countryside, and of firms winning the appliance program bids.

According to a circular issued by AQSIQ, "enterprises that will be found to have unqualified items in two rounds of supervision and inspection, as well as those that violate laws intentionally, shall be blacklisted and reported to local governments for investigation and punishment according to the law. They will also have their licenses or certificates of China Compulsory Certification revoked. It is also suggested that relevant departments disqualify such enterprises from selling home appliances in the countryside," People's Daily reports.

However, many industry experts have been clamoring for more moves from the government and enterprises to solve the problem.

"Apart from the current home appliance policy to benefit rural residents, government can also dispatch coupons to farmers, who can purchase their desired products of their own will," says Zheng Fengtian, deputy director of the School of Agriculture Economics and Rural Development under Renmin University of China.

Home appliance analyst Yu Qingjiao says qualified enterprises should set standards to guarantee supply, sales and maintenance, but local governments should also set rigid examination procedures to investigate product quality.

"Farmers are more reliant on word-of-mouth communications rather than advertising, compared with urban residents," Zheng points out.

Zhu Xinkai, a specialist on rural consumption and marketing from Renmin University, also says that "it's the critical time" for domestic home appliance makers to establish their brands. Entrepreneurs with shortsighted visions will finally be wiped out by the market competition.

(China Daily 05/18/2009 page11)