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. Last Updated: 07/27/2016

Foreign Tubes Give Rubin a Brighter Picture

If every American home has at least two televisions, many Russian homes seem to have three or four aging idiot boxes, the only problem being that most of them don't work. Instead, they sit around gathering dust as impromptu furniture, waiting for the day they either get stripped for spare parts, magically resurrected or - the most likely option - thrown away.

Of course, the average Russian household is as addicted to the tube as most of their counterparts in other parts of the viewing world. But any family that could scrape together the wherewithal during the window of prosperity that opened earlier this decade bought a Sony or a Samsung to take pride of place in their living room and/or kitchen.

Moscow television factory Rubin is hoping to change all this with its new range of 11 sets, all of them made with 65 percent imported parts. Well-nigh indistinguishable from standard South Korean or Japanese screens that are now the main players on the market, Rubin is hoping to boost sales to 150,000 televisions in 1999, up from 95,000 in 1998.

Before the perestroika period began in the late 1980s, there were dozens of Soviet TV manufacturers, 40 percent of them located in Russia. Between them, Rubin, Gorizont and others produced about 11 million televisions a year. Last year only 140,000 televisions were made in Russia as "the industry de-facto stopped," according to Anatoly Lashkevich, Rubin's general director.

Rubin is a publicly traded company - it was privatized in 1993 and is now about 30 percent owned by its employees - but its shares rarely change hands, especially on the over-the-counter market.

Nevertheless, it has managed to turn around its balance sheet to a degree. It has succeeded in bringing its debts down to 35 million rubles as of the start of this month. In 1997, one of the company's worst years, Rubin's debts exceeded 190 million rubles.

"This year we aim to pay off our debts and to increase our return on capital to 3 to 5 percent [from one percent now]," Lashkevich said. "I think our profits will reach several thousand dollars this year."

Until now, domestic producers in this industry - and other electronic goods and white goods industries - have relied on a strategy, such as it was, of price and protectionism. Helped by high tariff barriers, Russian producers have tended to shrug their shoulders as it were, effectively saying - "Sure, the quality is rock bottom, but it's a lot cheaper than the imported alternatives and Russians are used to sub-standard equipment!"

Lashkevich is hoping to keep the cheap part of the above equation, but add in an entirely new concept for a Russian television: quality. That quality comes in large part from the switch to imported parts - LG, Samsung, Thomson and Samtel - but Rubin has plans to switch to a domestic supplier once sales volumes reach critical mass.

"We are producing TV sets of the mass category - the cheapest and the most affordable for the population," said Lashkevich. "But if we compare our product to the same general category of televisions, ours do not lose out to other brands."

A recent browse around town found Rubin 51-centimeter screen televisions retailing for $166 to $210. Premium imports like Panasonic, JVC and Philips with the same size screens were on sale for $220 to $230. However, Asian middle-range brands were priced the same or lower than the Rubin. Aiwa and Samsung were $190 to $200, with Toshibas and Thomson ranging from $149 to $199.

Lashkevich said that the new generation of Rubins has nothing in common with the old Soviet-era televisions, which were known to unexpectedly explode and burn down apartments - at one stage last decade, exploding televisions were reportedly the second most common cause of urban apartment fires, after drunks smoking cigarettes in bed.

The new televisions are being produced in the framework of a joint venture called Soyuzny Televisor (Union Television) under the auspices of a Belarus-Russia intergovernmental project prepared by both Rubin and the Minsk-based Gorizont television plant. So far 15 million rubles for the project has already been allocated by the administration of the Russia-Belarus Union, but Lashkevich said the program needs 70 million rubles this year alone.

Rubin is joined in the project by fellow Moscow-based organization Integral research institute, the Kvant plant in Novgorod, Voronezh-based VELT and two Belarus enterprises - Vityaz from Vitebsk and Gorizont from Minsk. Cooperation between the plants will consist of exchanging research results and designs, staff training programs and combining for purchasing purposes in order to obtain cheaper prices on spare parts.

But the partners will not be producing the same televisions and they will still will be working on competing models. In fact, the conflicting import tariff regimes of Moscow and Minsk make it impossible for Rubin to compete on price with its Belarussian partners. Russia still charges customs fees on imports of Western parts, whereas Belarus has canceled its import duties in this area. This means that Rubin's televisions will be at least 10 percent to 15 percent more expensive than the Gorizonts.

Rubin is appealing to the government for customs breaks on importing parts, as well as help in dealing with what it claims are unfair practices on the part of some foreigners.

"We expect the Russian government to put an end to foreign importers who are offering dumping prices for their televisions here," Lashkevich said.

Despite the imported parts, Lashkevich stressed that the Rubin range is specially adapted to the peculiarities of Russian broadcasting.

"Our broadcasting is different to the way they do things in the West. We have a large distance between the transmitter and the regions so the signal in distant areas can be very weak. So the designers must think of the receiver's capacity for amplifying the signal after it reaches the television."

But the broadcast signal is not the only difficult area for a television operating in the wilds of Russia, or even in the heart of Moscow. Of greater concern is the decaying power grid's unreliability.

"Our power system again has different standards to Western ones. It is not stable, it has variations in voltage, especially in the countryside and remote areas. If we don't adjust televisions to these conditions, they will be burning," said Lashkevich.

To adjust Rubins to the Russian power supply, where voltage can fluctuate between 180 and 240 volts instead of a stable 220 volts, the new sets come with special voltage stabilizers installed.

Rubin and its partners are hoping that the new range will garner enough sales for the crucial next phase of their grand scheme. If Rubin can boost sales high enough, or alternatively, win sufficient external funding, it could get the conveyor belts rolling again at VELT. Russia's only television tube producer, VELYT closed last summer when multinational Philips withdrew from its joint venture with the plant. As the tubes make up 53 percent of the cost of an average Rubin television,getting VELT running again is vital for Rubin's long-term viability.

What Lashkevich is hoping is that the new range of televisions will send sales rocketing toward the 1 million to 1.5 million units a year that would be needed to make VELT a viable proposition.

That looks like an impossible mountain to climb, but Lashkevich is sure the Russian television market is a new boom waiting to happen, pointing to pre-perestroika days when some 20 Soviet factories put some 110 million televisions into Soviet homes.

"About 70 percent of them [77 million] now need replacing," he said, estimating that the market could easily soak up 5 million televisions a year.