EghtesadOnline: The 19th International Exhibition of Home Appliances is scheduled to be held at Tehran’s International Fairgrounds on Nov. 19 and will run for four days.
The exhibition has been organized with the aim of boosting commercial exchanges, expanding economic cooperation, increasing production, improving competition, and easing know-how and technology transfer, the event’s website at www.iexhap.ir reported.
Industry players will showcase their latest products.
A total of $215 million worth of home appliances were imported into Iran during the last fiscal year (March 2018-19), down from $1.28 billion in the previous year, indicating an 83.43% plunge year-on-year, data provided by the Islamic Republic of Iran Customs Administration show, according to Financial Tribune.
According to officials and businesspeople active in the industry, the domestic production of home appliances fell by 40% last year.
While annual domestic demand for refrigerators stands at around 1.2 million units, close to 850,000 fridges were produced last year. Nearly 560,000 washing machines were produced whereas demand amounts to 900,000 annually.
The gap in supply and demand, according to officials, was filled by contraband home appliances.
“The government banned the import of household appliances early last year, yet they continue to be smuggled into the country. These contraband items enter Iran from the western borders … Besides the issue of authenticity of the smuggled products, since import duty is not paid for them, they are sold at cheaper prices in the domestic market,” says Secretary-General of Iran's Home Appliances Association Habibollah Ansari.
According to the official, production has fallen due to many obstacles facing manufacturers.
“These include problems related to factories’ working capital, rising prices of raw materials, increasing end prices and the supply of foreign currency required for importing raw materials,” he said.
Hamidreza Ghaznavi, the spokesman of Home Appliances Manufacturers Union, said 75% of Iranians are customers of foreign home appliance brands.
The remaining 25% use products manufactured in Iranian factories that also use foreign spare parts.
“Though foreign companies active in Iran have left the country due to the reimposition of sanctions, yet, the transition of consumption from foreign brands to domestic ones has not taken place. The main reason for this is that smuggling of these items has increased,” he said.
Ghaznavi believes there is adequate space for domestic production to thrive.
“It’s the first time in almost 10 years that we are experiencing such an opportunity. Previously, foreign brands were advertised, foreign brands used to assemble their goods here in the country and almost everyone could use a commercial card to import home appliances. Today, none of these problems exists,” he added.
Yet, there are other problems, including shortage of working capital, foreign currency shortage, customs procedures and impediments created by the so-called secondary FX market, known by its Persian name Nima where exporters repatriate their foreign income and convert their earnings based on government quoted rates that are lower than the market rate.
“If production increases to reach an economic scale, prices too can decrease by around 20% for consumers,” he said.
Ghaznavi noted that at present, some 80,000 home appliance production units are active in Iran, 3,000 of which have created more than 100 jobs each.