SHANGHAI — According to a report released by Frost & Sullivan, China’s room air conditioning market experienced booming increases from 2009-2011, boasting a compound annual growth rate of double digits. The report noted that this increase has been credited to the Chinese government’s consumer electronics subsidy program, which is set to expire in 2012.

The Chinese government promulgated three different policies — “Government Subsidy to Energy-Saving Household Appliance,” “Household Appliance Trade-in,” and “Home Appliance Subsidy Program for Rural Areas” — to stimulate the purchase of energy-efficient home appliances. Many manufacturers benefited from these policies over the last three years, and the room air conditioning market gained momentum and flourished. But, in June 2011, the Government Subsidy to Energy-Saving Household Appliance came to an end, followed by the Household Appliance Trade-In credit at the close of 2011. The Home Appliance Subsidy Program for Rural Areas is expected to end in 2012.

Frost & Sullivan recently forecasted declines in China’s room air conditioning market due to declining exports, increased raw material prices, and an inventory backlog. In the three-year bullish market, due to the government’s policies, most room air conditioner manufacturers expanded production capacity. Due to rainstorms in the early summer, and the end of the 2011 incentives, the room air conditioning sales volume decreased sharply in south China. This decrease left huge amounts of inventory for manufacturers, said the report.