KARACHI, April 29: The domestic appliances market has undergone a tremendous change in the last two years in which one of the most significant changes is the wiping out of window air conditioners owing to the entry of Chinese split air conditioners at affordable rates. Two years back, some leading local manufacturers used to manufacture 40,000-50,000 windows A/C a year and there was a time when a window A/C was available at Rs20,000-25,000 as against Rs40,000 the split A/C costs. The situation has now taken a U-turn.

Only one leading company rolls out hardly 4,000-5,000 units, otherwise some leading players have already suspended the production of window A/C two years back. Some local producers are importing window A/C from China and selling them by using local label.

An executive of a domestic appliances company said that the Chinese split A/C at a price of Rs14,900 has virtually changed the consumers mind-set from window A/C.

Chinese split A/C enjoys the majority of the market share or 80-90 per cent share, leading to a price war situation among the market players. Local producers of deep freezers and refrigerators like Dawlance, Waves and PEL have become distributors-cum-importers of Chinese split A/C as they feel that assembling Chinese split A/C in Pakistan will prove costly.

These companies have been regularly placing huge orders with Chinese parties procuring supplies in bulk with labels of PEL, Dawlance and Waves pasted on the products. Some importers bring split A/C from Thailand and Far Eastern Countries.

Two Korean companies, LG and Samsung, are fighting with Chinese brand but people seem more fascinated by Chinese brands because of cheap price factor. One of the Korean companies LG is engaged in local production of split A/C while another local company is also rolling out split A/C, but Chinese A/Cs are giving tough time to the local competitors as well as to Korean brand assembler.

The market size of split A/C now ranges between 250,000-300,000 units a year in which majority of demand is being met through Chinese imports, an executive in a company said.

There is a common belief that various Chinese products especially split A/C cannot match the Korean and Thailand brands in quality. Besides, many market people were of the view that very low quality Chinese goods have found way into Pakistan as against high quality Chinese products which land in the US, Europe and other developed countries.

The executive did not agree with this notion. He said that quality of Chinese goods, landing in Pakistan, has so far been very satisfactory and the companies and even the importers have not faced any serious problems yet from the prospective buyers.

However, under invoicing and misdeclaration on the part of importers of Chinese products could be the root cause of Chinese products being so cheap in prices, market sources said.

Coming to refrigerators, the three main players — Dawlance, PEL and Waves – have been trying hard to improve their market share by introducing various models with new reduced prices. The intense competition among the leading players has so far proved beneficial to the consumers who now have a wider choice in selection.

Production of fridge is estimated to range between 650,000-700,000 units by the end of 2004-2005 as against 600,000 units in 2003-2004, an executive in a leading company said adding that around 70,000-80,000 units of fridge are being imported annually from China, Thailand and other countries.

“China has yet to make a big dent on our 80 per cent market share,” the executive said.

In deep freezers, the three leading players are in hunt for market share for the last many years. Because of the fact that deep freezers fall in the category of commercial products, its production has been maintaining a level of 140,000 units a year due to very slight increase in demand every year.

Positive economic indicators, the advent of cheap Chinese products and consumer financing by banks and leasing companies for domestic appliances have fuelled the buying passion among the buyers who have been striving hard to change their home status by brining in new models and designs to their homes.

It is hard to predict whether the demand of domestic appliances will continue to move upward in the next fiscal or remain static as it all depends on economic indicators, per capita income, inflation rate, population growth, consumers’ disposable income, interest rates, etc. For the last two to three years, the demand of domestic appliances has been showing growth owing to encouraging economic prospects.

“I think rising interest rates and fuel prices may affect the consumers’ disposable income. Otherwise chances seem quite bright that the demand of domestic appliances may increase in future,” the executive said adding that much depends how economy will perform in the new fiscal year.

Secretary, Information, Karachi Electronic Dealers Association (KEDA), Shahid Ali Sehar said that the entry of Chinese products has virtually changed the market scenario in favour of general public especially for the average income group people who can now afford various products because of falling prices.

However, he said that the quality of Chinese domestic appliances, arriving in Pakistan, is not up to the mark as compared to Chinese products reaching to Europe, US and other countries. China offers products of low, average and high quality and Pakistan is procuring the quality which is being made for third world countries.

“If a Chinese product runs smoothly for 15 years without any fault and problems it means that the quality is satisfactory and up to the global standards,” he said.

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