Financial Times - New white goods manufacturer to launch in Sri Lanka

A new white goods manufacturer from Asia is planning to enter the Sri Lankan market and is having talks with several companies in a partnership deal, according to industry analysts.

“There is a huge potential in Sri Lanka for a new white goods manufacture, due to rapidly increasing penetration levels of white goods in the country,” one analyst said.

He said that according to research there are 4.4 million householders in the country with an annual income of $170 per household and in Western province alone it is at $250.

“The penetration of sewing machines is one of the highest at 44 percent, while televisions have a 75 percent rate. Refrigerator penetration level is around 40 percent, while washing machines are at 10 percent. We have also found that 75 percent of the Sri Lankan households have electricity. These figures support the fact that there is a huge potential for white goods in the country,” the analyst said.

The analyst said that the new white goods manufacturer has still not decided whether to import the goods in its entire form on bring them down in knock door form. “They will finalize those details, once they find a suitable partner,” he said.

He said that there is an eight to ten percent penetration level in refrigerators and it is a growing market along with washing machines which have a penetration level of 10 percent to 12 percent.

“The renewal or replacement pace of refrigerators has reduced to 10 years from 20 to 30 years and the market for refrigerators is ever increasing,” he added.

Presently Sri Lanka has few large white goods manufacturers such as Singer, Hayleys, and Abans. The grey market is about 25 percent.

The analyst said the white goods market grew by 15 percent in 2005, and that sales typically peak during periods of harvest, festive times and corporate bonus payments, requiring greater acumen in merchandising.

Analysts said that white goods and consumer electronics still bring in broadly two-thirds of many companies' revenue, but it slowed down last year due to a multiple array of taxes and the opening up of the gray market, but it is unlikely that the government will go easy on the tariffs.

"Sales typically peak during periods of harvest, festive times and corporate bonus payments, requiring greater acumen in merchandising," an analyst said, adding that multi-branding strategies by many firms have supported their growth by broadening its potential customer base and securing sales to customers that opt for brand switching at the time of replacement.