Growth of consumer electronics and home appliances imports slows down in 2012 : CCC
View(s):China biggest supplier, India second largest; Japanese and Singaporean shares drop
Growth in consumer electronics and domestic appliances imports into Sri Lanka slowed down last year compared to robust growth seen in 2011/2010, according to a study done by the Ceylon Chamber of Commerce (CCC).
In 2011, there had been a sharp increase in imports both in terms of quantity and value in almost all categories of electronic items. The overvalued exchange rate coupled with low interest rates and reduction in taxes applied contributed to this growth in 2011. “The growth is more moderate in 2012 compared to 2011, with a number of consumer electronic products recording a decline in imports both in value and quantity. This is due to the sharp fall in the rupee, ceiling on credit and increased cost of borrowing,” the chamber said, releasing these details to the media this week.
As a result of rapidly changing technology and shift of production to low cost production destinations like China and India, the price of consumer electronic items has declined significantly over the years. This has made electronic items affordable to middle and low income earners in developing countries like Sri Lanka. In addition to that increasing income levels of the people and changing lifestyles has also increased demand for consumer electronics and home appliances. Customs statistics on consumer electronics and home appliances imported fall under both HS Chapter 84 on machinery and mechanical appliances as well as HS Chapter 85 on electrical machinery and equipment. The value of imports of HS Chapter 84 recorded a growth of 66 per cent in 2011 and 19 per cent in 2012. Imports under Chapter 84 cover a large variety of machinery and parts which are classified as investment goods in addition to consumer electronics and domestic appliances. Hence the growth in imports in this category reflects increasing demand for investment goods as well as demand for durable consumer electronics. The expenditure on importation of electronic machinery and equipment (HS Chapter 85) increased by 57 per cent in 2011 and by 18 per cent in 2012. As a per cent of total imports, Chapter 84 accounted for 8.2 per cent and Chapter 85 accounted for 6 per cent in 2012.
The CCC study found that the market share of China as a per cent of total imports have increased steadily over the years. In 2012 the market share of China increased to 34 per cent from 25 per cent in 2011. India is the second largest supplier accounting for 11 per cent of total imports in 2012.
Countries like Japan and Singapore, which used to be leading suppliers of these products have been steadily losing their market in Sri Lanka.
The decline in consumer electronic items imported in 2012 had been modest compared to the high rate of growth experienced during 2010 and 2011.
Therefore the volume imported of most items in 2012 remains well above the annual average volume of imports during 2005-2009. For example the number of household type refrigerators imported increased by 267 per cent in 2011 to reach 167,844 units. In 2012 although quantity imported declined by 26 per cent, the volume of imports of 119,923 units is well above the average of less than 50,000 units per year imported during 2005-2009.
While most products analyzed in the report recorded a decline in imports in 2012, few products recorded an increase. These are air conditioning machines, televisions and mobile phones.
Mobile phones imported increased by 282 per cent to reach 3.4 million units in 2011 up from 0.8 million units imported in 2010. In 2012 the number imported increased further to reach 3.5 million units. Sri Lanka is a country with high telephone density. According to Central Bank statistics in 2011 telephone density was 100.5 connections per 100 persons, indicating that the number of connections exceed the number of people living in the country.
In 2011 and 2012 out of the imports analyzed the following items exceeded 1 million units imported per year; fans, rice cookers and mobile phones. The items where imports exceeded 500,000 units per year in 2011 and 2012 are televisions, electric kettles, electric irons and fruit or vegetable juice extractors.
Items that recorded imports in excess of 100,000 units a year during 2011 and 2012 are fans, household type refrigerators, portable computers, other types of computers, toasters and radio broadcast receivers. Personal care electronic items such as shavers, hair clippers, hair removing appliances, hair dryers have recorded a modest growth over the years and the number of units imported of each item still remains below 50,000 units a year.
The detailed report gives value and quantity of imports for a wide range of consumer electronic products; fans, air conditioning machines, refrigerators, washing machines, computers, vacuum cleaners, food grinders and mixers, electric irons, microwave ovens, other ovens, coffee/tea makers, toasters, electric kettles, mobile phones, radios and cassette players, and all types of televisions and personal care items such as shavers, hair clippers, hair dryers, etc.
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