Iran’s home appliance and kitchen utensil exports, mainly to Iraq and Afghanistan, stand at $300 million annually, according to the director general of Trade Promotion Organization of Iran's Arab and African Affairs Department
“Evaporative coolers, water heaters, porcelain and glassware are among the most important exported products to Iraq,” Farzad Piltan was also quoted as saying by IRNA.
He noted that the most important problem in the export of Iranian home appliances to Iraq includes the presence of strong competitors in terms of quality and price, as well as clean energy standards in the field of large- and medium-sized home appliances and weakness in the marketing of home appliances.
According to Ali Moayedi Khorramabadi, the head of Iran’s Headquarters to Combat Smuggling of Goods and Foreign Exchange, the ban on import of home appliances in the year ending March 2019 energized local production.
“Domestic production meets 60% of demand for home appliances. The remaining 40% are met through international brands and exemptions considered for imports by those who live in border towns. We need to provide opportunities for residents of border towns to make a living via cross-border trade,” he was quoted as saying by IRNA.
Ban on Imports Extended
The ban on the import of home appliances has been extended and will be in place at least until the end of the current Iranian year (March 2022), according to deputy minister of industries, mining and trade, Mehdi Sadeqi Niyaraki.
Iran’s home appliance market is worth $6 billion per annum, 40% of which are dominated by contraband, according to the head of Iran’s Household Appliances Industry Union.
“Smuggled home appliances make up around $2.5 billion of the domestic market. The share of smaller items and kitchenware like cutlery, crockery and crystalware is higher, which has put the producers of these products in a hard place,” Alireza Mohammadi Daniali was also quoted as saying by the news portal of Tehran Chamber of Commerce, Industries, Mines and Agriculture.
As of two years ago, he added, when the international giants of home appliances left Iran to flee the economic sanctions and their repercussions, local producers stepped in and filled the void.
Noting that smuggling is causing a lot of harm to local businesses, he asked the government to step in and support domestic firms, given that on top of the contraband issue, producers are now dealing with the Covid-19 pandemic, consumers’ reduced purchasing power and a stagnant market.
Abbas Hashemi, secretary of the Association of the Industries of Household Appliances of Iran, was quoted as saying by IRIB News that the main challenge facing the industry is the insufficient supply of raw materials.
“For instance, manufacturers of refrigerators and freezers need a common thermoplastic polymer called ABS (Acrylonitrile Butadiene Styrene). The Industries Ministry should provide raw materials in cooperation with petrochemical industry. Home appliance producers refused to sign export contract because they were not confident that there would be sufficient inventory of petrochemical raw materials. The supply of steel sheets, copper and aluminum parts, and the allocation of foreign currency for purchasing essential imported parts are also posing challenges to the industry.”
Decline in Production Due to Power Outages
Home appliance production during the first two months of the current Iranian year’s second quarter (June 22-Aug. 22) declined by 20% compared with the two previous months due to the power outages, according to the secretary-general of the Iranian Home Appliances Association.
“Domestic home appliance production grew noticeably after the ban on imports and during the sanctions. Production registered a 70% growth in fiscal 2020-21 compared with the fiscal 2018-19,” Hossein Hosseini Shahroudi was quoted as saying by the news portal of Iran’s Chamber of Commerce, Industries, Mines and Agriculture (Otaghiranonline.ir).
He added that home appliance output increased by 29% in the current fiscal year’s Q1 (March 21-June 21) compared with the similar period of last year.
According to the official, production level is now back to normal.
Following a decrease in temperature and subsequent decline in electricity consumption by domestic users, in addition to growing action against illegal crypto miners, restrictions on power supply to the industrial sector has been lifted, Mostafa Rajabi Mashhadi, spokesman for the Iran Power Generation, Distribution and Transmission Company, told IRNA.
Summer demand led to severe power and water shortages in the past months in most regions, resulting in blackouts and dry taps.
Electricity consumption on June 20 surpassed 62,000 MW.
The new record came, as high temperatures nationwide drove general electricity consumption to new heights, prompting authorities to prioritize domestic users over industries in supplying power.
Industries Ministry’s Output Data
The domestic production of refrigerators and washing machines grew while that of TVs decreased in the first four months of the current fiscal year (March 21-July 22), latest data published by Ministry of Industries, Mining and Trade show.
A total of 692,000 of refrigerators and freezers were produced during the period, registering a 20.4% growth in output compared with 574,900 devices produced in the corresponding period of last year, IRNA reported.
Production of washing machines stood at 430,700 during the same period, 36.2% higher than the 316,100 devices made in the same period of last year.
A total of 347,800 TVs were produced by Iranian producers from March 21 to July 22, 4.3% less than 363,500 in last year’s corresponding period.
The secretary of the Association of Audiovisual Device Producers blames the decline on three domestic as well as one global factor.
“The crisis of global shortage of microchips, especially microprocessors, which are the core of the central television system, has had a negative impact on the domestic production of this product,” Mohammad Reza Shahidi was also quoted as saying by IRNA.
According to the official, the coronavirus lockdowns, power outages and decline in people's purchasing power are the domestic factors in the TV production decline.
“At present, close to 150 types of television sets from 32 inches to 75 inches are manufactured in 14 factories across the country. Our overall production capacity is three million sets per year, yet actual production stands at 1.5 million,” Shahidi was quoted as saying by IRNA.
The official noted that domestic demand stands at between 2.2 million and 2.4 million TV sets per year.
“Due to an import ban placed on home appliances, the remaining demand is supplied through contraband. Our estimates are that more than 2,000 television sets are smuggled into the country every day. That makes more than 700,000 sets per year.”
Without paying tax, import duties, insurance fees or other such expenses, smugglers can sell their goods at competitive prices in the local market and this robs domestic products of their ability to thrive.
