Lighting Manufacturers Bemoan Production, Export Problems

The 24th International Exhibition of Chandeliers and Decorative Lights, in which many producers of classic and modern chandeliers have participated, opened at Tehran’s International Exhibition Center on Jan. 16.

“When speaking of chandeliers, people usually think of crystal, bronze and glass,” CEO of Monji Light Industries Mehrdad Mahboubi tells Financial Tribune, “but our main material is wood, which is imported from Siberia as raw material.”

Mahboubi said other materials are secured domestically.

“All the production processes are carried out in our factory. We process the raw material, create value added and export part of our products to Iraq, Tajikistan and Afghanistan. Recently we have shipped samples to Europe and are waiting for the feedback,” he said.

The industry player said the sector is facing problems regarding provision of raw material.

“One problem is that almost anyone can import raw material and these people more often than not import low-quality products. Liquidity is scarce and banks are usually reluctant to grant loans to production units. They find trading and commercial companies more lucrative,” he said.

Mahboubi added that fluctuations in foreign exchange rates influence the price of imported material, which impacts the price of end product and makes export difficult.

“The government doesn’t facilitate or support exports. Not long ago, we were exporters to Europe, but now we are [mainly] an importer. This is while our products can easily compete with the best of Europe in both quality and design. Yet, we have not been successful in marketing,” he said.

“Advertising is very expensive and given the problems and high expenses in the business, producers cannot afford to pay such large sums of money.”

Since production costs are high in the country, Mahboubi said some producers have opted for imports rather than production.

“They import chandelier parts in CKD form and assemble them in Iran. These are then offered in the domestic market as Iranian products. Currently close to 80% of the domestic market are dominated by foreign products and it is very difficult for local producers to carry on with their business,” he said.

Hesam Mahmoudi, an advisor to the CEO of Mahdi Luster Industries, believes the business is not that bad but says the number of customers has declined due to the recession in the domestic economy.

“Foreigners, the Chinese in particular, have entered the Iranian market in the last 10 to 15 years and have grabbed a big part of it. The Chinese enjoy lower production costs, which makes their end products cheaper and gives them a higher profit margin,” he said.

“But in Iran, domestic production is difficult due to the manifold expenses, high taxes and workforce issues, which make our products more expensive and gives smaller profits.”

Mahmoudi said foreigners produce a variety of products that appeal to customers.

“We have tried in the past few years to diversify our products and elevate their quality in order to satisfy all tastes. Today, we have exports to Azerbaijan, Russia, the Persian Gulf littoral states and Ukraine. We have arranged a research team because we are planning to expand our exports.”

Mahmoudi said that in the field of brass products, Iran is among the top three producers in the world both in terms of quality and design.

“We have a minor problem technology-wise and Europeans are ahead of us in this regard. Another problem is the expensive raw material that increases the prices of our end products. On top of that, we pay value added tax as well as tax on our sales, each of which damages the business in its own way,” he said.

Mohammad Reza Qarehyazi, CEO of Roshanai Company that produces decoration and lighting products, echoes his fellow businessmen’s remarks by saying that high taxes, foreign exchange rate fluctuations as well as high energy and insurance expenses all complicate production and make the business troublesome.

“The government is pursuing better international ties. If this is achieved and producers are supported, exports will increase and the business will thrive,” he said.

Qarehyazi expects the government to help producers expand exports.