Fake electrical appliances and poor customer service are hurting a multi-billion dollar initiative designed to promote consumption among rural households, a report has found.

Quality inspectors teach residents in Tancheng county in East China's Shandong province how to spot fake milk products in a campaign on Sunday to mark International Consumer Rights Day, which falls on Monday.

The report, released on Sunday ahead of International Consumer Rights Day on Monday, found problems with the program, known as "home appliances going to the countryside", under which the government subsidizes 13 percent of the cost of the appliance for rural families.

The China Association of Quality Promotion (CAQP) said an investigation conducted in 10 provinces and municipalities between July 2009 and February this year revealed problems with fake goods and customer service, including service shops being too far away, expensive accessories and poor service quality.

Discussing the investigation results at a forum on consumer rights held in Beijing on Sunday, Chen Chuanyi, secretary-general of CAQP said: "Some companies put fake labels on their defective products and try to sell them in rural areas."

"Some take the program as a chance for stock disposal and they sell low-efficiency products at a cheap price and lie to rural consumers that such a promotion is under governmental subsidy.

"Because of the remoteness and the vastness of rural areas, residents usually need to travel a long way before they can reach a service shop, which is usually located in more populated areas."

The report found 58 telephone calls made to 150 service shops went unanswered, representing 39 percent of calls.

In addition, 17 out of 100 households were dissatisfied when questioned about customer service in rural areas in Sichuan and Hebei provinces and Beijing.

The report also found 231 out of 1,000 service staff were unfamiliar with relevant policies and service promises.

"For example, it is required that cell phone companies should provide backup phones to consumers who cannot have their broken phones fixed within seven days, however some companies failed to put into practice," Chen said.

By December last year, about 37.7 million sets of household electronic appliances had been sold under the program, with sales passing 69.3 billion yuan (US$10.2 billion). The first pilot experiments were held in 2007.

"The 230 million rural households make up a huge consumer group in China and it is of high potential. The current national regulations on after-sale services were made a few years ago. Many consumers have suggested corresponding revisions and improvements," Chen said.