Economy, Business And Markets

Colored Pencil Market Hit by Imports, Smuggling

Colored Pencil Market Hit by Imports, SmugglingColored Pencil Market Hit by Imports, Smuggling

Iran has been a producer of colored pencils for over four decades. Since 2011, however, domestic markets have lost ground to foreign imports.

According to statistics released by the Islamic Republic of Iran Customs Administration, domestic producers currently hold under 5% share of the colored pencil market in Iran, effectively dwarfed by 70% share of China and 13% share of Turkey and Indonesia.

This is while, rampant smuggling has also taken its toll on the domestic market.

At present, domestic manufacturing output stands at 1.2 million pencils per year, while the industry’s installed capacity exceeds 5 million, according to a report by Forsat-e Emrooz daily.

Market analysts and experts believe Iran’s stationery industry, especially the colored pencil manufacturing sector, is not only capable of creating thousands of jobs and becoming an export powerhouse in the region, but it can also turn into a major supplier of raw materials for international stationery giants.

However, they maintain that these big ambitions may not be realized unless the government extends its strong support, mainly by raising import tariffs and reconsidering tax codes for the industry.

Managing Director of Pars Medad Company Ziaeddin Jalalian laments the predicaments facing domestic producers despite the advantage of cheap raw materials, such as paste, colors and the limited need for wood imports.

“Exploiting these advantages allows for the transformation of Iran into a major force in terms of exporting colored pencils in the region,” he said.

The 1990s used to be the industry’s heydays, as domestic production would meet nearly all the demand for colored pencils at home. Back then, global giants flocked to Iran for setting up production centers.

A notable example is Pars Medad’s cooperation with Faber Castell in the production of the “Alligator” brand, a memorable name for many adult Iranians today.

According to Jalalian, unrestrained imports, which is chiefly to blame for the absence of such joint ventures today, is the biggest obstacle to the domestic industry’s growth.

Echoing the same remarks, Jahanbaksh Behzadi, chairman of Iran Stationery Producers Association, noted that smugglers effectively sidestep all regulations by paying no taxes and selling directly to retailers who are more than happy to be supplied with cheaper products.

Behzadi emphasized that the primary solution to the industry’s woes is banning the import of colored pencils altogether for at least five years “to help Iranian producers find their place in the market without facing the unfair competition from cheap foreign products”.

The global stationary market is growing rapidly and is expected to reach $226 billion by the end of 2020.