It is not erased in Russia – Newspaper Kommersant No. 68 (7513) dated 04/19/2023
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Foreign manufacturers producing equipment in the Russian Federation have problems. The Italian brand Candy, owned by China’s Haier, has suspended its factory in Kirov amid declining demand and increased competition from cheaper Chinese and Russian brands. Turkish Arcelik, which produces Indesit equipment in Lipetsk, reduces the cost of production. Without financial benefits from the state, the production of equipment in Russia becomes unprofitable, market participants say. But experts expect the Candy plant to resume operations by the summer after selling off stocks.
Due to overstocking, a lack of demand and an increase in the exchange rate, the Candy consumer electronics plant in Kirov suspended production on April 17, “only because of the exchange rate, the company lost 15% of its profits,” a local official told Kommersant. According to him, the fact that cheap equipment of Chinese and domestic brands began to massively arrive in Russia also affected. A source close to the company confirmed this information.
The Ministry of Industry of the Kirov Region claims that Vesta JSC (100% of the Italian Candy Hoover Group, the parent company of which is the Chinese Haier Smart Home) “works as usual”, the number of employees is 546 people. The official website of the Vesta plant says that the capacities allow the production of more than 2 thousand devices (washing machines) per day. The Ministry of Industry and Trade did not answer “Kommersant”. Alexey Pogudalov, commercial director of Holodilnik.ru, confirmed the suspension of Candy shipments from the Russian plant.
Another interlocutor of Kommersant in the market says that the factories of the Turkish Arcelik in Lipetsk (produce refrigerators and washing machines Indesit, Beko, etc.) faced the same problems. But the company decided in response to reduce the cost of final products by 16% to load capacity. “Arcelik has not yet been able to launch production in the Russian Federation at 100%, but with a decrease in prices, despite losses, there is a chance to reach the maximum.” Candy and Arcelik did not respond to Kommersant’s requests.
According to Holodilnik.ru, sales of refrigerators in the Russian Federation in February in pieces fell by 42%, to 196 thousand, in money – twice, to 7.1 billion rubles. The market leaders are TCL, Midea and Nordfrost. Sales of washing machines in pieces decreased by 67%, to 249 thousand, in money terms – by 42.6%, to 7.4 billion rubles. The most popular brands were Gorenje, Weissgauff and Renova. Sales of Indesit and Candy fell 26% and 13% respectively. At the same time, the representative of the retailer notes that, in general, the average check of a washing machine decreased by 3.6%, to 29.8 thousand rubles, and refrigerators – by 13.3%, to 36.6 thousand rubles.
According to the Managing Director of Large Household Appliances of F+ tech | Marvel” by Dmitry Levin, without state support, imports will put serious pressure on the production of household appliances in Russia: its cost in China or Turkey is lower than in Russia. “This makes Russian production unprofitable, they need economic support measures, such as tax incentives,” Mr. Levin believes. According to him, in the first quarter there was a general decline in sales of household appliances in the country, in April there was a slight surge, but in May “a lull is expected again.”
Enterprises can apply for preferential loans, as early as mid-2022, the Ministry of Industry and Trade announced. They emphasized that thanks to state support in the form of parcel imports of components, manufacturers of household appliances began to actively increase their capacities, without specifying numbers and names.
A top manager of one of the large retail chains believes that the main reason for the suspension of Candy production was the lack of control over final prices, “the company does not have its own distribution, so the stores themselves set the final prices, as a rule, they set prices lower to attract customers.” In his opinion, the Candy plant will restore work by the summer, after the sale of warehouse stocks.
The interlocutor of Kommersant adds that in the case of the Arcelik factories in Lipetsk, the new Turkish owners are trying to re-establish sales of products in Russia, since “there were no serious investments in the modernization of factories and quality improvement under American investors.” “As a result, Indesit is now losing market share to Chinese companies,” a Kommersant source explains. “But with competent leadership, the situation may change by the end of the year.”
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