IRAN: U.S. sanctions’ silver lining for Iranian home appliance industry Economy

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By Ebrahim Fallahi

December 25, 2020 – TEHRAN TIMES

TEHRAN – Although the U.S. sanctions have created major problems for the Iranian economy in many areas, for one particular industry they have been certainly “a blessing in disguise”, and that is the home appliance sector. The home appliance industry has flourished with the U.S. sanctions pushing foreign competitors out of the domestic market.

Following the re-imposition of the U.S. sanctions, most of the major international home appliance manufacturers – mainly Asian brands – that were enjoying Iran’s 80-million market suddenly gave in to the U.S. pressures and left Iran.

Many of the mentioned brands like Samsung and LG had been present in the Iranian market since their very beginning and it can be claimed that Iran was their launch pad into the global markets.

Over the past few decades, despite the emphasis of the Leader of the Islamic Revolution on using domestic products, the torrents of foreign products have been overflowing the Iranian home appliance market, drowning many newly-established domestic brands in their path.

But now, with the U.S. imposing its toughest-ever sanctions on almost every sector of the country’s economy, the Iranian market has been once again wiped out of foreign products, and local brands are given a new opportunity to flourish.

Since big foreign companies left the Iranian market, domestic home appliance manufacturers started a new movement to push for more production on one hand and to indigenize the knowledge for producing high-tech components and parts used in this industry, on the other hand, to cut off reliance on foreign sources.

Earlier this week, the secretary of the Association of Iranian Household Appliances Industries said that domestic production of equipment and parts used in the home appliance industry has saved Iran $220 million.

The market for Iranian products has grown significantly in the last two years. Manufacturers, despite the difficulties created by the sanctions and despite the restrictions and closures caused by the coronavirus pandemic, have shown significant resilience and workers are still going to their jobs without any hiatus.

Interestingly, more than 80 percent of the economic damages caused by the coronavirus pandemic in the Iranian market are reported in the service sector and not in production. This means that domestic manufacturers have been able to overcome the hurdles and take full advantage of the foreign brands leaving the country.

According to the data released by Industry, Mining and Trade Ministry, manufacturing of washing machines in Iran increased 58.2 percent during the first eight months of the current Iranian calendar year (March 20-November 20), compared to the same period of time in the past year, while the production of refrigerators and freezers increased by 29.2 percent.

The production of other products like televisions, air conditioners, water air coolers, stoves and etc. have also increased.

On the eve of entering the 15th century of the Solar Hijri Calendar, although Iran’s economy is going through its most difficult days, sparks of hope are seen on the horizon for the country’s production sector.

The significant turn of Iranian consumers toward domestic products is in fact a “shift of paradigm” in the society’s behavioral pattern. In fact, just as many French, Italians, and Germans prefer and buy their own goods, even at a higher price than their foreign counterparts, Iranians have found that buying domestic goods is a priority. At the same time, the price of domestic goods is much cheaper than the price of foreign samples, and also in terms of quality, domestic commodities are more competitive now than in the past.

The government is also implementing new programs for promoting domestic products, like holding international and national exhibitions to showcase the potentials and capacities of Iranian manufacturers.

In this regard, the 20th International Exhibition of Home Appliances kicked off at Tehran Permanent International Fairgrounds on Friday in accordance with health and safety protocols. The four-day exhibition called “Thriving amidst Sanctions” is only open to experts and commercial visitors.

Interacting in international events along with qualitative and quantitative development in the domestic market can increase the export potentials of Iranian products.

It should not be taken for granted that Iran has also various competitive advantages in this industry in terms of supplying raw materials such as steel sheets, petrochemicals, copper and brass sections, the abundance and low costs of energy and workforce in addition to the strategic position of the country, compared to other countries in the region.

So, the country is also taking necessary measures for becoming a major exporter of home alliances in the region. Iranian manufacturers have managed to export up to $250 million of home appliances in the previous years and currently, the production and assembly lines for Iranian home appliances have been set up in some of the countries in the region and Iran is exporting its products to the target markets by sending Completely Knocked Down (CKD) kits to the mentioned production lines.

This is a turning point in the history of the country’s economy, but also in the history of Iran.

Therefore, officials and decision-makers in the country’s legislative and executive institutions must understand the significance of the current situation and pave the way for the prosperity and development of Iranian brands.

Many excess regulations and bureaucratic procedures, like the restrictions on importing raw materials and machinery, etc. should be removed, the development of the export market should be strongly pursued, and Iranian brands should become prepared for a significant presence in international markets by building upon the capacities of the domestic market.

With the proper support of the current movement by the government, a bright future awaits Iranian producers and the country’s economy whether the external factors are for or against the country.

EF/MA

source https://www.tehrantimes.com/news/456155/U-S-sanctions-silver-lining-for-Iranian-home-appliance-industry

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