According to iSuppli, China's exports of major home appliances are expected to fall 2.7 percent in 2009 as exports decline due to the global economic downturn. Combined shipments of major home appliances in China are expected to be 177.5 million units in 2009, down from 182.4 million units in 2008. Total shipments represent market trends for major appliances such as air conditioners, washing machines, refrigerators and microwaves.

Exports will fall 8.5 percent from 2008 to 99.1 million units from 108.3 million.

Thanks to government subsidies, China's domestic market will continue to grow despite the global economic slowdown. China's finance ministry expanded a stimulus program to cut the price of home appliances for rural consumers by a hefty 13%. This has kept the domestic market growing at a fairly fast pace, though not as strong as in previous years.

China's big domestic equipment makers dominate the major appliance market. These companies are promoting product differentiation in the domestic market and focusing on cost in the export market. Designing major appliances with new features that will appeal to consumers is a major challenge for manufacturers.

These companies are adopting vertical integration strategies to control key components and equipment and help reduce production costs. Many companies have started to outsource low-end products to contract manufacturers. Major appliance suppliers are reluctant to expand capacity in order to improve equipment utilization.

Due to the general lack of innovative and diversified products in the non-variable frequency air-conditioning market, major air-conditioning enterprises in China are developing products using variable frequency technology.

Due to higher prices, the Chinese variable frequency air-conditioning market is expected to grow only modestly in 2009-2010. Chinese local enterprises are still weak in product design and market development of variable frequency air conditioning. Chip suppliers need to provide total solutions for controlling variable speed motors. Microcontrollers (MCU), key chips used in major appliances, are controlled by Japanese suppliers. Japanese suppliers have gained control of the MCU sector through close partnerships with Chinese home appliance companies. Air conditioning is still a more important market for suppliers of semiconductors to electricity companies. Therefore, the development of the aviation industry should also be greater, so as to better drive the whole city