Rise in Home Appliance Output

EghtesadOnline: Iran’s output of home appliances increased by nearly 8% in the last Iranian year (March 2019-20), the deputy industries minister said.

News ID: ۷۵۰۲۲۶

13 June 2020

“Plans are to boost production by 34% in the current year for production to hit 11.6 million home appliances," Mohammad Reza Kalami was also quoted as saying by Tasnim News Agency, adding that by March 2022, production will meet the total domestic demand for home appliances.

Domestic demand for home appliances was around 13.6 million in the year ending March 2018, but has now reduced to 12 million given the rise in the value of foreign currencies and prices.

Mandatory ID Numbers for Home Appliances

All home appliances in the Iranian market have been recently required to have an identification number printed on them, otherwise they will be deemed as contraband and their producers or sellers will be subject to anti-smuggling penalties, says the head of the Headquarters to Combat Smuggling of Goods and Foreign Exchange.

“Iran’s home appliance market has a turnover of 400 quadrillion rials [$2.25 billion]. The domestic market is sizable and smuggling in the field is very high and this is why the ID number scheme is first being carried out in this sector. We plan to gradually expand the scheme to include other products as well,” Ali Moayyed Khorramabadi was also quoted by ILNA as saying.

The official asked customers to demand ID numbers from sellers of home appliances to be reassured that the product they want to buy is original and not a contraband.

“By using the ID number, customers can access a guarantee system and receive after-sales services,” he added.

Moayyedi noted that the scheme was supposed to kick off in January, but it was postponed due to the outbreak of the novel coronavirus.

Spokesman of the Producers of Household Appliances Guild Union Hamidreza Ghaznavi says that based on the new regulation, after receiving an ID number through a website introduced by the Ministry of Industries, Mining and Trade, each product will be given a random tracking code and both the ID number and tracking code are required to be printed on the product, Mizan Online reported.

Speaking earlier on the same subject, Morteza Miri, the head of Home Appliances Sellers Union, said ID numbers should be printed on domestic home appliances before leaving the factory.

Based on official figures, 75% of Iranians are customers of foreign home appliance brands and the remaining 25% use products manufactured in Iranian factories, which also require 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 increased,” he said.

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.

Ghaznavi noted that if production increases to reach an economic scale, prices too can decrease by around 20%.

Smuggling Deals Blow to Domestic Production

Alongside apparel, foodstuff, mobile phones and gold ingots, household appliances are among the main contraband products widely available in the Iranian market.

“The government banned the import of household appliances in 2018, but they continue to be smuggled into the country. These contraband items enter Iran from the western borders … Besides the issue of authenticity of smuggled products, since import tax is not paid for them, they are sold at unrealistic cheaper prices in the domestic market,” Secretary-General of Iran's Home Appliances Association Habibollah Ansari has been quoted as saying.

Miri said two out of three home appliances in the market are contraband.

Latest data provided by the Islamic Republic of Iran Customs Administration show 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.

Some 80,000 home appliance production units are active in Iran, 3,000 of which have created more than 100 jobs each.

Spokesman of the Headquarters to Combat Smuggling of Goods and Foreign Exchange has told Fars News Agency that contraband home appliances worth more than $2.2 billion were smuggled into Iran in the fiscal 2018-19, adding that this robs Iranians of around 80,000 job opportunities.

The report of Majlis Economic Commission’s probe into government policies and performance in its fight against smuggling was read aloud by Hassan Hosseini Shahroudi, the spokesperson of the commission at the parliament’s open session, on May 12.

“Despite the announcement made by the Goods and Foreign Exchange Anti-Smuggling Headquarters on the decline of smuggling in the years ending March 2017 and March 2018, the parliamentary investigating committee found different results.

The headquarters had put the volume of smuggling at $12.5 billion in the year ending March 2017 and $13.1 billion in the year ending March 2018. However, according to parliament’s report, goods and foreign currency smuggled in each of those years were valued at between $21.5 billion and $25.5 billion on average.