Chinese air conditioner manufacturers are confronted with stiffer market conditions under new policies, said President Assistant Wu Shangjie of the China Household Electric Appliance Research Institute. They have to improve their products' energy conservation levels, or else be forced out of the industry.

The new energy conservation law took effect on April 1, 2008. The government will boost energy development projects and give top priority to energy conservation in the national energy development strategy, according to the law.

Air conditioners, consuming more than 70 percent of electricity in households during peak seasons, attract the regulator's attention undoubtedly. Market access standards for air conditioners will be lifted to energy efficiency grade II from V by 2009, according to the National Development and Reform Commission.

A 10 percent increase in air conditioner energy efficiency saves as much as 37 million kilowatts of electricity, equivalent to building expenses of four 1.8-million-kilowatt power plants in ten years or 160 billion yuan ($22.89 billion).

As a result, energy-saving air conditioners have dominated the market. Whether manufactures can survive the new policies depends on their ability to produce energy efficient models.

Then manufacturers have to upgrade their energy-saving technologies to meet the government's requirements and the market demand, striving for a bigger share in the future market at the same time.

The number of competitive air conditioner manufacturers dropped from 52 to 33 in 2006, according to Gome Electrical Appliances Holdings Ltd's 2007 air conditioner study report. Competition is expected to be more intensified in 2008.

(Chinadaily.com.cn April 25, 2008)