September 24, 2003	Wednesday	Rajab 26, 1424

KARACHI, Sept 23: Many leading domestic appliances manufacturers have become importers and distributors. They are importing home appliances from China and selling them at cheaper rates.

Appliances manufacturers claim that they are importing only those items which they do not assemble in Pakistan.

The huge influx of cheaper goods imported by two leading home appliances makers has led to a ‘price war’ in the market between Korean and Chinese products. The ultimate beneficiary of the war is general consumers who get items of their choice at more affordable rates. They sometimes do get confused by frequent fall in prices and introduction of galore of designs and varieties after every three to four months.

“We are doing business in a fashion that suit us better. There is no restriction for any assemblers or manufacturers to engage in the trading,” a leading home appliances manufacturer who is importing microwave oven, iron, toaster, sandwich-maker, vacuum cleaner, juicer blender, etc., told Dawn on Tuesday.

In reply to a query as to why the manufacturers are opting for import rather than setting up assembly units of same products, he said: “It is not feasible to run a manufacturing unit when cheap Chinese products have already made deep inroads by grabbing a good market share.”

Besides legal imports from China, a sizable quantity is also arriving through illegal channels and under-invoicing. In such circumstances, it would not be a wise decision to set up an assembly plant of such products with huge capital, he said.

A random market survey reveals that some shopkeepers of local domestic appliances are confusing the buyers by convincing them that toaster, microwave oven, iron, sandwich-maker, etc., are being produced locally by same companies engaged in manufacturing refrigerator, deep freezers, washing machines and air-conditioners. In this tongue twisting technique, these shopkeepers are trying to restore the confidence of buyers on familiar brands so that they could purchase the product without any hesitation. “These products are being imported from China,” another leading assembler of the home appliances said, who is also busy in importing these items from China.

Chinese products have entered Pakistani markets with a bang. The ‘price war’ has not only restricted to local appliances these days. It is also fought on other fronts. Some leading Korean companies engaged in importing split air-conditioners, are bound to curtail the prices owing to advent of Chinese split ACs (two tons) to Rs48,000 from Rs67,000 one-and-a-half years back. On the contrary, Chinese split ACs of same weight can now be purchased at Rs38,000.

In the television sector also, Chinese television has hit the market with lower price tags. A 14-inch colour TV is being sold at Rs5,500-Rs6,000 as compared to Korean TV of Rs7,500-Rs8,000, while a 20-inch Chinese TV is priced at Rs9,500 as compared to Rs12,500 of Korean TV (locally manufactured).

“The competition has forced the Korean TV assemblers to reduce prices and cut their profit margin that was too high,” former vice-chairman, Pakistan Electrical and Electronics Manufacturers Association (PEEMA), Pervaiz Alam Khan, said.

He said many shopkeepers had also become importers by brining in cheaper TV kits and other parts from China (without picture tube) and started assembling TV after installing old picture tubes of TV and computers. As a result of this, dealers are still selling a 14-inch colour TV at Rs3,200-Rs3,500. This practice is likely to end in a couple of months as the government has levied the import duty of 25 per cent on old monitors from zero per cent recently to discourage this menace. The 14-inch Chinese TV, being sold in markets nowadays, carries new picture tube, he added.

Mr Pervaiz claimed that no under-invoicing or smuggling is taking place. Similar reply also came from many shopkeepers in Saddar area.

However, a local TV assembler said that smuggling and under- invoicing had hit the local markets and persistent decline in prices of Chinese TV speaks volume of it. “We (the local TV makers) have to revise prices in three months or six months in order to remain competitive in the local market otherwise cheap TV arrivals from China will eat away the local industry,” the assembler said.

A local dealer at Abdullah Haroon Road said that China produces three qualities of consumer durables — A, B and C. It is up to the parties that give orders as per their countries’ requirement. “We are using the B quality products of China that is quite affordable for the general public,” he said, adding that the A quality Chinese products are being used in America and the Europe.

Chinese VCD players are also giving tough time to the existing Korean companies. A Chinese VCD player can now be purchased at Rs1,700-Rs2,600 depending on the designs and quality as compared to Rs4,500-Rs5,000 of Korean models, which used to be Rs6,000-Rs7,000 two years back.

A Chinese DVD player is being sold at Rs3,500-Rs5,000 as compared to Rs6,000 of Korean product. Japanese items (assembled in Malaysia) carry prices of Rs7,500-Rs10,000.

“This indicates how situation has change. The change, however, is good only from the consumers’ point of but as for local industry it bears the brunt,” an authorized dealer of a local TV assembler said.

In the last one-and-a-half years, shopkeepers of local appliances and electronic items have invested heavily in face-lifting of their shops in order to attract the consumers. Many local assemblers, after every three to six months, come out with a consumers’ friendly scheme like buy one big product and get a small one free, price cuts, discount and gift schemes and easy monthly instalments packages.

The entry of banks and leasing companies in consumer financing schemes on easy terms through local assemblers has further injected some buying euphoria for consumers to adopt a new lifestyle by purchasing these items.