Chinese shoppers are still going strong – retail sales up 16% YoY – but for awhile they weren’t stuffing their carts with as much electronics as they used to. So it’s no surprise that Gome Electrical Appliances Holdings Ltd. said net income fell to Rmb964.6 million in the first nine months ended Sept. 30, from Rmb1.59 billion a year earlier. It expects a boost in Q4 as government rebates for electronics spur sales in big cities.

Bloomberg was a little off in its reporting of this story, saying a 13% rebate for electronics sold in the countryside would help Gome. In fact, this isn’t the case. Gome’s presence is weak in rural areas and Tier 3-6 cities – the strongest places for China’s “Home Electronics To the Countryside” program (家电下乡). Moreover, sales for the program were pretty strong in Q2 and most of Q3 (lots of air conditioners sold; plus some holidays) and have been trending down since.

Gome is more likely to gain benefit from the government’s “Cash for Trash” program (以旧换新), in which consumers can turn in old appliances and get up to a Rmb400 credit toward a new TV, PC, washer, refrigerator or air conditioner. This program is only in the cities and has been very popular since trials started in September. It will likely go nationwide in May 2010, adding tailwinds to what I believe will be a strong comeback year for consumer electronics in China.

SHAMELESS PLUG/HONESTDISCLOSURE: I work for RedTech Advisors (China) Ltd., which offersresearch, investment and strategy services related to China'sConsumerTech, CleanTech and MedTech markets.  For more info, please see www.redtechadvisors.com.