(Yicai) Sept. 30 -- China's National Day holiday, a “Golden Week” that begins tomorrow, is a key sales period for appliances, though manufacturers and retailers are showing little enthusiasm for aggressive discounting this time as rising costs, weak consumer confidence, and a soft housing market limit the effectiveness of price-led promotions.

The nation’s home appliance makers and retailers are instead prioritizing premium products, product upgrades, quality improvements, and customer experience, according to industry sources.

“With the long holiday coinciding with government subsidies for home appliance trade-ins, the National Day break remains a rare and valuable promotional window for the year," said Ge Sen, secretary-general of the Shanghai Household Electric Appliance Professional Association. He predicts a rebound in footfall at appliance experience stores in major shopping districts over the seven-day holiday.

Still, higher store traffic may not translate into stronger sales. Demand for major household appliances will remain weak because consumer confidence has yet to fully recover, according to Wang Hongji, head of home appliance research and insights at NIQ GfK China, a market intelligence services provider. For Golden Week retail sales, he forecasts year-on-year declines of 5.9 percent for televisions, 3.9 percent for washing machines, and 9 percent for air conditioners.

Manufacturers are also approaching holiday promotions cautiously. Some mid-range and premium models may see some moderate discounting, but mass-market products are unlikely to be marked down aggressively just to generate higher sales, an AC retailer in South China said.

“Relying solely on low prices to drive volume holds little value for either manufacturers or retailers at the moment,” the person noted. While consumers have become more cautious this year, they still prioritize quality, so businesses are more likely to use targeted discounts on premium offerings to stimulate broader demand, the retailer said.

In addition, sustained increases in raw material costs are straining profitability at manufacturers, leaving them with limited room to lower prices on mass-market products, the person added.

A regional sales manager at a TV maker in South China said rising production costs have prompted companies to focus their Golden Week sales strategies on promoting newly launched and upgraded products rather than competing on price.

The home appliance trade-in subsidy policy has been implemented for three years, causing some consumer demand to be pulled forward, he pointed out. Combined with ongoing weakness in China's property sector, the industry is unlikely to see a major surge in demand over the holiday, he said, adding that the modest decline in the market is expected to continue, reinforcing the company's emphasis on newly introduced products.

"Simply lowering prices is no longer enough to drive market or brand growth," said Liu Wenjuan, general manager of Yongsheng Home Appliances. She explained that a new generation of young consumers prioritizes the sense of quality and emotional value a product offers, making price a secondary concern.

The manager of a home appliance store in Nanfeng county, Jiangxi province told Yicai that since young people returning home for the holiday typically buy mid-to-high-end products, its flagship outlet is focusing holiday sales efforts on high-end models that offer healthy profit margins.

"The home appliance industry is shifting from pure price-based competition to competition based on experience and value -- a positive development for both consumers and the industry," said a representative for Midea's China business.

Editor: Tom Litting