More than 400 firms, including 394 domestic and 27 foreign ones from countries such as Germany, China and Turkey are taking part in the 19th International Exhibition of Home Appliances.
The expo opened at Tehran’s International Fairgrounds on Tuesday and will run for four days before concluding on Friday, IRNA reported.
According to Iran's Home Appliances Association Secretary-General Habibollah Ansari, this edition of the expo is focused on boosting exports.
He says the number of participants in the ongoing event has seen a 35% rise compared to last year’s edition of the expo.
Speaking to ILNA, Deputy Industries Minister Hossein Modarres Khiyabani noted that Iran annually exports $400 million worth of home appliances to neighboring, European and African countries.
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 officials and businesspeople active in the industry, domestic production of home appliances fell by 40% last year.
Some 80,000 home appliance production units are active in Iran, 3,000 of which have created more than 100 jobs each.
While domestic demand for refrigerators stands at 1.2 million units per year, close to 850,000 fridges were produced last year. Nearly 560,000 washing machines were produced whereas the market demand amounts to around 900,000 annually.
This gap in supply and demand, according to officials, was filled with 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, they are sold at unreal and cheaper prices in the domestic market as import tariffs are not paid for them,” Ansari said.
According to the official, production has fallen due to many obstacles facing manufacturers.
Domestic production of home appliances fell by 40% last year
“These include problems of factories concerning lack of working capital, rising prices of raw materials and the subsequent increase in end prices as well as problems related to the provision of foreign currencies required for importing the raw materials,” he said.
Hamidreza Ghaznavi, the spokesman of Home Appliances Manufacturers Union, says 75% of Iranians purchase foreign home appliances and the rest use Iranian products that also use foreign spare parts.
“Though foreign companies that were active in Iran have left the country due to the reimposition of sanctions against us, 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 not subsided and increased as well.”
Ghaznavi believes much space has been created 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 said.
Yet there are other problems, including foreign currency shortage, cumbersome customs procedures and impediments created by the so-called secondary FX market, known by its Persian name Nima where exporters are made to repatriate and convert their earnings based on government quoted rates set lower than market rates.
“If production increases to reach an economic scale, prices too can decrease by around 20% for consumers,” Ghaznavi said.
The official added that at present, there are some 80,000 home appliance production units in Iran, around 3,000 of which have created more than 100 jobs each.
Indian Home Appliance Maker to Invest in Qazvin
An Indian manufacturing company of home appliances plans to make investments in Qazvin Province for the establishment of a production line.
Representatives of the Indian company met and held talks with provincial officials in Qazvin last month, Mehr News Agency reported, without mentioning the name of the Indian company.
As for the reason behind choosing Qazvin Province from among other Iranian provinces for investment, the Indian side said, “as compared to Tehran, Qazvin enjoys high potentials and capacities for investment activities.”
“Our company will start its production in Qazvin in 2020 and all state-of-the-art technologies for manufacturing home appliances will be transferred to this province over five years.”
Given the US sanctions and in the absence of two famous South Korean brands of home appliances in Iranian market i.e. “Samsung” and “LG”, a suitable opportunity has been created in Iran for investment, the Indian side said.
The two South Korean brands for long dominated Iran's home appliance market prior to the latest round of US sanctions.
The Indian company started manufacturing home appliances’ parts and equipment in 2004 for the two South Korean companies, but the company embarked on producing these parts itself in 2012.
Once sanctions imposed on Iran are lifted, Iran will get the lion’s share of the whole Central Asian markets, according to the Indian side, adding that in the first phase of this project, the company will manufacture refrigerators, LCD TVs and washing machines.
