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Air-conditioner Market Remains Cold
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Even though the summer has gotten hotter, the air-conditioner market is anything but hot.


Air-conditioner prices at local home appliance retailers have declined due to falling copper costs, despite expectations of a sharp rise during the busy season.


Shanghai-based China Paradise Electronics Retail Ltd, the owner of Yolo Electronics, said price of air-conditioners has fallen about 10 percent in the past few weeks and sales have seen a mild hike rather than a sharp spiral, as in previous summers.


"The (air-conditioner) market isn't hot as before, leading to price cuts and promotions to warm up sales," said Huang Jianping, spokesman for China Paradise Electronics.


The country's third largest appliance chain has sold 50,000 air-conditioners on weekends since summer, much fewer than the 150,000 units sold in the same period last year.


Suning Appliance Co Ltd, the nation's second-largest home appliance chain, said business is tougher this year as a stagnated property market in major cities has cut down demand from home buyers for air-conditioners.


Gome Appliance, China's biggest home appliance chain, is selling 10,000 air-conditioners everyday with price cuts of as much as 40 percent offered by some manufacturers. The Beijing-based retailer has soaked up 5 billion yuan (US$625 million) worth of air-conditioners which it purchased in March and April to handle the busy summer season.


"The decline in commodity prices has enabled manufacturers to cut costs and reduce retail prices to attract consumers," said Chang Shuning, a spokesman at Gome's Shanghai office.


Copper costs in June eased to around US$7,000 a tonne from the US$8,500-per-tonne peak in May, according to the London Metal Exchange.


Major air-conditioner makers, including domestic firms Haier, Midea, Hisense and Gree and overseas suppliers Panasonic and Mitsubishi, in May sent out notices to retailers informing them that wholesale prices will rise due to surging cost of raw material, such as copper, which nearly tripled in the past three years.


(Shanghai Daily July 18, 2006)


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