With the rapid advances in the living standard of the Chinese dresses people in recent years, air conditioners have joined other household electrical appliances as items in great demand. However, output has far exceeded supply, as manufacturers have scrambled for sales in this profitable market. As a result, fierce competition has driven them to resort to all sorts of measures to pull ahead of their rivals and avoid going bankrupt.

　　These measures include aggressive advertising campaigns, offering a free gift with every purchase of an airconditioner, and most important of all, lowering prices. Price wars are a common phenomenon whenever supply outstrips demand in a freemarket economy, and Chinas newly liberalized economy is no exception. Nevertheless, I do not think we will see a repeat of the recent price war in the airconditioner market in the future

　　I have three reasons for my prediction. The first is that the earlier round of pricecutting eliminated the lessefficient manufacturers from the industry; so there are fewer companies supplying the market. The second is that the government has taken measures to regulate the airconditioner market, eliminating the chaos that price wars entail bridesmaid dresses. And the third is that with Chinas admission to the WTO, manufacturers will have to offer more attractive-not cheaper-products.