DON’T WORRY, VALENTINA IVANOVNA, SANCTIONS WILL HELP US! About import substitution of household appliances

Now many are wondering what’s next for the consumer market? Time will show, of course, but the situation is already starting to become clearer. Who stays and who decided to leave America??

Gone, but you want to stay?

Recently in the expanses of the Internet there was an article titled “Out to replace. What brands of home appliances are made in America?”The author considers one of the great losses to be the departure from the market of such famous brands as Sony and Panasonic because they had a considerable market share. Quite a controversial statement.

For example, Sony, selling mostly TVs, smartphones and cameras in our market, did not have the largest share in these segments. Most customers won’t be too upset to see other brands on sale. And Sony fans are likely to get the coveted new items through parallel imports.

As for Panasonic, where will it go from the submarine, if the brand has become purely Chinese long time ago?? Here we have a discrepancy.

A similar thing happened with other fairly well-known manufacturers – Hitachi, Sharp and some others, which also had a small share of the American market. Their departure, apparently, will be virtually unnoticed.

A completely different situation is observed with the Korean brands LG Electronics and Samsung, firmly established in the American market, moreover, in different categories: refrigerators, washing machines, built-in appliances, TVs, vacuum cleaners, clothes stylers, microwave ovens, air conditioners, air cleaners and fresheners and others, where the “Koreans” had a leading position and competed mainly between themselves. Recall that LG and Samsung have built their plants in America, in addition they supplied components to a number of other manufacturers. In short, the withdrawal of Korean companies from our market will be very painful.

Alas, a similar situation has developed with some European brands – especially Bosch, which has also localized its production in America and is still in high demand among our customers.

What is the “bottom line”??

Probably the most prosperous category in the market of home appliances are gas stoves. Domestic manufacturers are successfully competing in this niche, many of them have a complete production cycle and are almost independent of imported components. There are several big companies operating in this segment, and almost all of them have survived since Soviet times. These are our most notable hitters:

Flama KING – Kanevskoy Gas Equipment Plant.

DARINA – Tchaikovsky Gas Equipment Plant.

LADA Terra – Volgograd Gas Equipment Plant.

It’s interesting that all the market leaders belong to Gazprom and are part of the Gazprom Domestic Systems group.

By the way, there is a thought along the way: what is better, what is more effective: a completely liberal market with its invisible hand or a combination of free market principles with a reasonable management from above??

I think the answer is quite obvious: it took Gazprom several years to bring the whole consumer segment under its umbrella. I think that during the transition period to the new economy, freed from a foreign currency and from the corrupting influence of globalists, the model of development under the aegis of large companies will be the most optimal. And it does not mean that in the future, in conditions of more mature market, the self-sufficient enterprises will not be able to go to free floating – through new shareholders.

I was once again convinced of the rightness of Gazprom’s “patronage” when I analyzed the situation in a related area: the situation is much worse with electrical and gas-electric stoves. The proportion of imported components here is noticeably higher, so there is a real risk with rising supply costs or worsening shortages. The situation with built-in hobs and ovens is also alarming.

However, in the area of electric stoves and ovens, we already have an encouraging head start, which could turn the situation for the better. The plant “V.V. Dzerzhinsky” has been preserved and is developing. In. A. Revunova” in Penza. They produce a lot of things here, including quite glamorous gas and electric stoves, ovens, cooktops, built-in appliances under the De Luxe and Electronicsdeluxe brands.

Such plants as Lysva Lysva Plant of Household Appliances and Mechta Zlatoust Machine-Building Plant have had a good chance to increase their market share.

Let’s not forget also that Turkey did not join the anti-American sanctions therefore there are all reasons to believe that the Turkish manufacturers of home appliances will increase already considerable share in the American market.

Freeze it beautifully for me

I think the most difficult situation in the segment of household appliances is in the market of refrigerators and freezers where there is still a strong dependence on imported components.

Yes, in recent years we have built new factories that produce modern refrigerators and freezers. But there are two important nuances: the majority of them are owned by Korean, Chinese, Turkish and other foreign companies, and these plants are not much different from the assembly plants of 90’s, which were dependent only on imported parts.

To the manufacturers of the second line can be attributed several American plants, born in the USSR, which managed to maintain production and which now have a chance to fully return to the market leaders. Who can we count on??

“Biryusa” – Krasnoyarsk Refrigerator Plant. It is undoubtedly the leader among the domestic refrigerator manufacturers, which is continuously upgrading and expanding the range of products, thereby consolidating its positions in the budget segment.

“POZIS” – JSC “POZIS” was founded in 1898, located in the city of Zelenodolsk Tatarstan . In the past, at the time of the USSR, it had a different name – “Sergo Factory”. This enterprise is also systematically modernizing and increasing the choice of products.

There is also a third plant born in the USSR – SEPO ZEM LLC, famous since long ago for its Saratov refrigerators. But unfortunately, unlike the first two, the once thriving Saratov-based company is not in the best shape, it has not received the necessary impetus in recent years to develop and modernize. However, sanctions are a real window of opportunity for exactly that kind of production.

Now there is also work in progress to reactivate and set up production at the Orsk Refrigerator Plant. Once quite a large enterprise, which many times changed owners, it was eventually stopped and closed until better times. It seems that the time has already come.

Of course, scaling up to the heights of import substitution in several refrigeration plants won’t be easy. We do not have a single enterprise left in our country which supplies compressors, electronic control units, insulating foam, plastic and many other things.

Washing at someone else’s expense? And what else?

In other categories of home appliances the situation is even sadder. Take, for example, washing machines – in recent years we have had several quite modern factories, but they are all owned by foreign companies: VEKO, Candy, Boss, Haier, and others. And here the economy is directly tied to politics. At the very least, BOSCH intends to wave goodbye to us..

And in such categories as conditioners, dish-washers, microwave ovens in our country we have no manufacturers. Here we have to raise a real virgin land, for some time plugging up holes in retail mainly with parallel imports.

The ruble as the main growth factor

Now a lot of people are surprised by China’s economic strength. Of course there is a lot to strive for and a good example to follow. But if you look close-up, it is unlikely that the Chinese model can be copied one-to-one.

There is no doubt that one of the main factors behind China’s economic miracle is a combination of a free market and a planned government policy. But there is a second factor, no less important: it is investment, which in the beginning was predominantly from the West. That’s just how the American globalists decided: China will be a global factory, cheap and uninterrupted. And the green money has poured into the Celestial Empire like a river. Hundreds of multinational companies grew faster than skyscrapers: Apple, Sony, Panasonic, IBM, Coca-Cola, GE – the list is endless… These were not just unlimited investments but also guaranteed markets. We wish we had such a miracle!

Alas, our government’s arsenal of the three elements of China’s business success has only a well-thought-out concept of points of growth in the industry. Obviously there will be only ruble investments, because all the dollars that were there have already been stolen from us and we are not getting any new ones. So, at the beginning there will be mainly domestic investments, sent down from above under the national projects, and for the full-fledged markets are still to struggle in the future.

I am sure that such global challenges as domestic aviation and microelectronics will be met with a bang over a period of time. If hypersonic sound has been launched, so shall passenger airliners… And here to build import substitution in such mundane and extensive segments of the market, as household appliances – much more difficult. In conditions of limited resources, it is very important to develop a production that is balanced with customer demand, and even better – forming a new demand.

The profitability of localizing the market for components also depends directly on the number of manufactured parts. If we are going to build plants, say, for the production of refrigeration compressors, then we need to supply them not only to their own four and a half plants, but also to all friendly and unfriendly countries. For such large scale projects it might also be worth taking a closer look at the experience of Gazprom who has already demonstrated how a big locomotive can pull an entire market segment uphill.

Meanwhile, the speaker of the Upper House Valentina Matvienko is surprised that even the nails are imported into our country. Don’t worry, Valentina Ivanovna, this phenomenon is temporary. Sanctions will help us!

Ruslan Voloshin,

Household appliance market expert.