JD to expand trade-in deals to boost consumption

Chinese e-commerce platform JD and its partners will invest 6.5 billion yuan ($900 million) this year to encourage consumers to upgrade their refrigerators, televisions, other consumer durables and home furnishings through trade-in deals, as part of the country's broader efforts to bolster domestic consumption.

China is encouraging trade-in deals for consumer goods, including automobiles, household appliances and home furnishings, to boost consumption, thereby economic growth, according to a guideline released by the State Council, China's Cabinet, in March.

JD said it is confident the favorable policies will encourage more than 20 million consumers on its platform to participate in the trade-in deals this year, thus potentially leading to recycling of more than 30 million items. Last year, some 10 million consumers participated in trade-in deals.

"The trade-in program is expected to help increase sales of related products by 100 percent over last year," said Lei Sun, head of the service department at JD's home appliances and life business unit.

"We accept various products for trade-in deals, regardless of brand, time of purchase, appearance or condition. We will also provide complimentary services nationwide to help transport and dismantle old products," Lei said.

Small appliances covering 55 categories can be exchanged for new, better ones on JD. Consumers can opt for trade-in deals across different categories of products — an electric fan, for example, can be exchanged for a rice cooker, the company said.

JD's small home appliances recycling warehouse in Wuhan, Hubei province, recycles about 2,000 to 3,000 old products daily, and the volume is expected to double, or even triple or quadruple, during the peak season.

For products that still have residual value, such as home appliances, JD will collaborate with upstream and downstream enterprises to disassemble and reuse the parts.

"Consumer goods like mattresses, sofas, cookware, garment hangers, bathtubs and smart toilets all can be traded in on JD, including those with no residual value. Consumers will get a certain amount of subsidy and we will help process the old products as construction waste," Lei said.

Meanwhile, different local governments have formulated specific plans to promote trade-in deals. In early May, the local government of Zhangjiakou, Hebei province, held events to promote the use of green and intelligent home appliances in urban communities and rural areas, and a green alliance for home appliance trade-in services has been established to meet such demand.

In addition, the local government of the Inner Mongolia autonomous region said it would encourage enterprises to carry out on-site trade-in deals for appliance upgrades on a large scale.

The local government of Tianjin said it would support home appliance enterprises to establish a dedicated area for exchanging old products for new ones both online and offline, and promote sales through direct discounts or trade-in deals.

"China's consumption sector has significant growth potential, and that is why both the central and local governments have spared no effort in introducing policies to promote consumption growth," said Fu Yifu, a senior researcher at the Star Atlas Institute of Finance.

"The growth in consumer demand will also help drive the growth of industrial production, and further promote China's economic growth," Fu said.