(Yicai) Aug. 10 -- Chinese home appliance giant Midea Group will be absent from the current wave of promotional events targeting air conditioner distributors, according to a company representative.

After Midea recently skipped one such annual event launched by air-con manufacturers, the person told Yicai that this is because the relevant segment of the Foshan-based firm is undergoing a retail transformation.

Relying on various incentives to encourage distributors to stockpile large amounts of goods during the sales off-season has been a common practice in the industry for more than 30 years, but it is becoming a thing of the past.

The previous sales model was suitable for the era of industry growth, the representative said, but noted that after entering a period of saturation, such a practice is becoming a constraint that hinders development.

To attract distributors to buy large quantities during the sales off-season, the Chinese air-con industry has long relied on a channel sales model that involves providing them with significant subsidies. Manufacturers benefit from getting funds from early bulk purchases, while dealers take advantage of discounts.

Midea's adjustment is a deepening of its long-standing direct-to-consumer retail-driven strategy, an air-con components supplier said to Yicai. Leveraging its nationally unified digital warehousing and distribution system, the company is shifting its performance evaluation focus from "payments from distributors" to "end sales volume," which will help alleviate the financial and storage burdens of dealers, the person added.

"As online channels continue to account for a larger share of sales, flattening is the future trend of industry sales development," Xiao Youyuan, chairman of Zhuhai Samyou Environmental Technology, said to Yicai. "We may even see a new marketing model of 'factory stores + after-sales service + logistics distribution."

The change at Midea is taking place against the backdrop of increased inventory and sales pressure in China's air-con industry, with sales falling 5.6 percent to 62.82 million units in the first half of the year from a year earlier, according to data from market research firm ChinaIOL.Com. In addition, exports dropped 6.8 percent to 52.7 million units.

An air-con materials supplier told Yicai that his clients have been experiencing a significant decline in production and sales this year.

Editors: Tang Shihua, Martin Kadiev