(Yicai Global) March 4 -- Chinese air conditioner companies have intensified discounting to boost demand in the sector that is expected to cool down due to virus-stricken real estate sales, canceled trade events, and declining purchasing power, according to an insider.

Zhuhai's Gree Electric Appliances took the lead in destocking yesterday by slashing its premium model price by CNY500 (USD72) to CNY2,999 (USD430) on its JD.Com flagship store and physical retail outlets, Guo Demei, president of All View Cloud Data Technology, told Yicai Global. Others are expected to follow suit, she added.

After the Covid-19 outbreak has been contained, analysts have predicted a marketwide rebound to kick in by the second half of this year. The air con sector is no different. Based on the anticipated second-half balancing, full-year sales could fall just slightly, according to Guo. 

Manufacturers are likely to rely on discounts to stimulate demand as few new product models are expected in the first quarter due to the cancelation of Appliances & Electronics World Expo, said Guo. The major global trade fair was supposed to be held in Shanghai in mid-March.

Gree's competitor Midea Group has prolonged its Chinese New Year discount campaign to offset the impact stemming from the Covid-19 outbreak in the first half of the year. But that should not cause big problems in the annual performance, said Yin Bitong, vice president of the Foshan-based company.

But the hurdles are large and come in different shapes now. The virus outbreak has slowed down the retail and property sectors, as Guo pointed out. Workers have had a hard time entering communities to install air con equipment amid epidemic prevention, a Gree store manager in Guangzhou told Yicai Global.

The intensifying competition can also be threatening to some. As big players cut prices to clear out inventory, some small manufacturers may be eliminated in the process, according to Guo. 

But one thing that each air con firm can trust is that eventually, summer will come. And more specifically June 18. The annual shopping festival should drive demand, Guo predicted.

Editor: Tang Shihua, Emmi Laine