Iranian Home Appliances Meet 70% of Domestic Demand

EghtesadOnline: Iran’s home appliance industry is more than 80 years old and offer a wide range of products used in homes and offices, meeting a significant portion of domestic demand.

News ID: ۷۷۹۰۷۳

11 September 2017

It is considered one of the accelerators of economic growth and generates added value for other industries such as steel, petrochemical and copper.

The Home Appliances Association was established in 1979 as an NGO and comprises three main sections.

The first section is engaged with all energy-consuming home appliances such as thermal, cooling and cooking appliances, sewing machines, electric vegetable mincers, juicers and meat grinders. The second section covers non-energy-consuming appliances, including different types of kitchenware and dishware. The third section deals with home appliance parts and accessories, Financial Tribune reported.

“All household appliance parts and accessories, except for compressors used in refrigeration systems, are domestically produced,” the association’s secretary-general, Habibollah Ansari, said in an exclusive interview with Financial Tribune.

“At present, Iranian household appliance production meets 70% of the domestic demand.”

Production, Market

According to director general of Metal Products and Home Appliances Department at the Ministry of Industries, Mining and Trade, there are 1,000 licensed household appliance production units in Iran.

“They are operating at 70-75% of their production capacity,” Abbas Hashemi also told Financial Tribune.

In general, Hashemi said, the nominal production capacity of energy-consuming home appliances stands at 18 million units per year.

“Over 12 million units are produced, depending on the financial status of the manufacturer, market conditions and people’s purchasing power. Notably, some 85% of famous foreign brands available in the Iranian market, especially South Korean ones, are produced inside the country under the license and inspection of parent companies,” he added.

Hashemi put the value of Iran’s home appliances market at $7-8 billion, noting that some 145,000 people are directly employed in Iran’s home appliance industry.

The provinces of Tehran, Alborz, Khorasan Razavi, East Azarbaijan, Isfahan and Qazvin are the main hubs of home appliances production in the country.

Ansari stressed that the home appliances industry is fundamentally a customer-oriented industry i.e. production must be consistent with customers’ needs.

Noting that many small manufacturers have had to close their business in recent years, he called on small-scale producers to merge into bigger ones by increasing their investment in the machinery, technology and workforce.

The association’s secretary-general also highlighted the importance of moving toward export-oriented production and said domestic producers should boost exports to spur growth and development.

He deemed as “unjust” the fact that producers in Iran have to pay value added tax, noting that in other parts of the world VAT is collected from the end users only.

This, he explained, imposes a heavy financial burden on manufacturers by increasing production costs.

Foreign Trade

Iran’s home appliance imports stood at $272 million during the four months to July 22.

“Imports in the fiscal 2016-17 stood at $722 million,” Hashemi said, citing statistics from the Islamic Republic of Iran Customs Administration.

China, the UAE, South Korea, Turkey, Thailand, Italy and Germany are major exporters of home appliances to Iran.

The main appliances imported into Iran include split air conditioners, refrigerators and small appliances.

He noted that currently, smuggling has a 17% (about $1.2-1.3 billion) share in the Iranian home appliances market.

“To fight smuggling, imports are now only allowed by official representatives of the parent companies,” Hashemi added.

According to the head of Metal Products and Home Appliances Department, Iran exported $123.3 million worth of home appliances during the four months to July 22, mainly to Iraq, Afghanistan, Turkmenistan, the UAE, Syria and Italy.

Evaporative coolers, cooling devices, refrigerators and gas appliances are among the major products exported from Iran.

Hashemi said the export target for this year (March 2017-18) has been set at $275 million.

Last year, Iran exported $245 million worth of home appliances.

“A bigger participation in the global markets is necessary for this industry to grow and prosper,” he said.

Referring to hurdles in the way of doing trade, Ansari considered banking problems a major issue and something that needs immediate attention.

The upcoming 17th International Exhibition of Home Appliances is scheduled for November 25 at Tehran’s International Permanent Fairgrounds and will run for four days.