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. Last Updated: 07/27/2016

TV Production Boom Local in Name Only

While the production of television sets is one of the fastest growing branches of the economy, components making up about 70 percent of the value of each set are imported.

All that has remained domestic are the names: Rubin, Gorizont and Sokol.

State Statistics Committee data for January to September shows that a total of 836,000 televisions were made in Russia.

This figure is six times higher than the number of sets produced last year.

Alexander Levantovsky, manager for the sales department of Moscow’s Rubin factory, confirms the production boom. "This year, three times the number of Rubin televisions were produced compared to last year, and in 2001 we plan to increase production even more by 1.5 times," he said.

Virtually all companies manufacturing televisions both in Russia and other countries in the Commonwealth of Independent States report similar trends.

Two years ago, several Russian and Belarussian television and television-part manufacturers created the Soyuzny Televizor, or Union Television, project with the aim of returning domestic television sets to the market.

The Joint Assembly of the Belarus-Russian Union, a cross-parliamentary body with its own budget and bureaucracy, adopted the project on Nov. 16, 1998.

The Rubin factory and Belarussia’s Gorizont came up with the idea. In 1998 the project was priced at 374 million rubles (then about $38 million) and was financed from the assembly’s budget.

Total output of Belarussian manufacturers Gorizont and Vityaz — both participants in the Soyuzny Televizor program — exceeded 500,000 sets this year, an increase of about 25 percent.

Moreover, the products are not piling up in warehouses, say representatives at virtually all factories.

However, state subsidies under Soyuzny Televizor came to a mere 30 percent of the figure promised, and credit for the domestic TV boom more likely goes to the 1998 ruble devaluation, which made local sets even more price competitive than imports.

Rubin factory director Anatoly Loshkevich said that his plant was one of the project’s initiators, but didn’t receive a kopek from Soyuzny Televizor.

The sole patriot using local parts is Minsk’s Gorizont venture.

The insides of its televisions are almost 50 percent Belarussian and are assembled both in the Russian Kvant factory in Novgorod and the Kozitsky factory near St. Petersburg.

However, Gorizont’s Russian partners have serious complaints about the quality of the components — though Sergei Kontus, Gorizont’s head of marketing, insists that the rate of faulty goods has been reduced to 1.5 percent.

But Russian brand names don’t necessarily mean Russian parts.

The Kozitsky factory produces its Raduga televisions almost exclusively from foreign-made parts.

Rubin’s chief designer, Igor Fedosen, said about 90 percent of components in Rubin sets are manufactured abroad. Televisions made at factories participating in the project, apart from Gorizont, are at best made from 30-percent domestic parts, he said.

Most of the imported parts are cheap resistors and condensers that have no influence on the price of the final product. The most expensive part is the tube, which is made abroad in all locally made television sets.

Nonetheless, assembly is still profitable — import tariffs on imported parts are 15 percentage points lower than import tariffs on assembled sets with an average size screen of 51 centimeters.

The main advantage of domestic items is, as always, their low price.

Dmitry Sukhov, manager of the audio-visual department at Samsung’s local office, said that research conducted by a focus group in Russia showed that televisions costing 30 percent to 40 percent less than competitors are bought by customers without regard for the make and, in general, the quality.

However, the price gap between domestic and imported equipment is set to decrease.

According to market researcher Mobile, 15 of 30 of the most popular makes of televisions in the capital have screens of 51 centimeters to 54 centimeters.

Meanwhile, in European countries, 50 percent of the market is taken up by large-screen televisions, said Sergei Kruty, manager of the local office of electrical appliance maker Philips. Television tube production has been redefined in favor of tubes with a diagonal of 63.5 centimeters to 81.3 centimeters.

"In order to keep average-size tubes profitable, companies, including Philips, may increase the price of 50.8 centimeter tubes in the future," Kruty said.

This could seriously reduce the competitiveness of domestically assembled televisions.

"Television sets produced in Russia or Belarus are today 10 percent cheaper than Samsung or Thomson," said Vitaly Prikhodchenko, head of the advertising department of the electronics retail network Mir.

"Soon, due to the aggressive pricing policy of foreign competitors, this difference will be reduced to 5 percent. Then, no one will buy our televisions."

Mobile research has shown that the share of domestic sets sold on the capital’s markets has already fallen from 20.79 percent at the start of the year to 13.07 percent in October.

Rubin’s Levantovsky is not shocked by these figures. "Research was connected with retail trade, while buyers of domestic televisions look where the sets are the cheapest. The main sales of our Rubin televisions, for example, are not in shops, but at radio markets like Gorbushka," he said.