Nine local TV assembling units close down: Influx of cheaper sets
KARACHI: While the production of electronic consumers’ durables showed a robust growth during the last four years — TV makers portray a grim business scenario for the current fiscal.This is due to the continuous erosion of their market share by the influx of cheap TV sets into the local market that has led to closure of nine manufacturing units out of 15 in Sindh and Punjab during the last one year.Last year, there were 15 units of assembling TV sets locally, which has now curtailed to only six units. There is a cut-throat competition among the existing players as all of them have been curtailing prices for the last few years in order to maintain their market presence, besides facing threat from the cheap TV sets.
TV production has risen to 966,468 units in 2005-06 compared to 908,805 units in 2004-05. It was 843,079 units in 2003-04 and 764,612 units in 2002-03.Comparing production in 2005-06 with that in 2004-05 there has been deceleration as against robust growth in production of refrigerators, deep freezers, split air-conditioners, and electric fans etc.
“Our production is declining owing to the cheap availability of TV sets produced by some vested interests by using old computer monitors,” Chairman Pakistan Electronics Manufacturers Association (PEMA), Sarafarazuddin told Dawn on Wednesday.
He said that the market players do not pay any sales tax and they use kits and circuits, which are being smuggled. “The actual TV set market is over two million units per annum but half of the share has been eaten up by cheap computer monitor TV sets’ makers.I do not think that TV sets production will be able to cross over 800,000 in the current fiscal as manufacturers have been facing 50 per cent decline in TV sets production as compared to last year,” he said.On smuggling of TV sets, he said that about 100,000-150,000 sets were entering the market through illegal channels in which majority of share is held by Plasma, LCD, and HD sets etc.
Many market players are doing roaring business by purchasing the old computer monitor. They maintain the picture tube and install new Chinese kits to make it a complete TV. The price of such 14 inch TV is just Rs3,000, while 17 inch sets can be purchased at Rs3,500.“This kind of cheap TV is popular among low income group people as it suits their pocket, former chairman Pakistan Electrical and Electronics Manufacturers Association (PEEMA), Pervaiz Alam Khan said.He said it was true that the local TV industry was now facing decline in their sales as majority of share has been taken by monitor TV sets as well as some Chinese TV sets.Before market entry of the Chinese TV some TV makers had the monopoly in the market and they were working on high margins. Korean TV makers had reduced the price of their 21 inch TV to Rs9,900 from Rs18,900 two and a half years back after sensing the stiff price war owing to the advent of Chinese brands, Perwaiz said.
On domestic appliances segment, Member Engineering Development Authority of Pakistan Shakeel Ahmed forecasts that the production of refrigerators will cross over one million units in 2006-07 from 861,604 units in the last fiscal.“Market is growing on the back of rising population, positive economic indicators, electrification of villages, and movement of people to urban from rural areas, rising per capita income etc,” he said. There has been hardly any smuggling of refrigerators in the country, he added.In deep freezers, he said that the local production will touch 200,000 units in 2006-07 from 185,684 units in 2005-06. He said that the split A/C production will touch between 400,000-450,000 units in the current fiscal as compared to 363,247 units last year.
The total market size will range between 700,000-750,000 units compared to 650,000 units last fiscal. The rest of the market demand is met through imports.According to the State Bank’s annual report 2005-06, production of air- conditioners (split type) has surged to 363,247 units in 2005-06 from 181,820 last year. In deep freezers, production has risen to 185,684 units in 2005-06 from 178,970 in 2004-05, 111,059 units in 2003-04 and 86,595 units in 2002-03. Refrigerators production rose to 861,604 units in 2005-06 from 784,561 units in 2004-05, 617,439 units in 2003-04 and 375,864 units in 2002-03.
Electric fans production increased to 1.450 million in 2005-06 from 1.4 million in 2004-05, 1.36 million in 2003-04 and 1.25 million units in 2002-03.The SBP said that the major contribution to the growth of electronics sub group came from the significant rise in foreign direct investment (FDI) in 2005-06 and increased credit availability for consumer durables in the current fiscal year. Split A/C is becoming popular due to reduction in prices.