Chinese electronics manufacturer TPV Technology to double TVs contract manufacturing at Shushary industrial site, belonging to the Chinese company subsidiary OOO TPV CIS
Last year the local plant assembled 600 thousand TVs, this year the contract manufacture will increase up to 1.2 mln units, which will provide 60% plant capacity utilization and the company revenue will approach 6.5 bln RUR.
The company provides conservative prediction of revenue because the shift in consumer demand from expensive maximum diagonal 3D-smart TVs to affordable Russian brands is expected only in 2017. In addition to Philips TVs (TPV bought out the right to produce and sell Philips TVs from the Dutch Royal Philips) St. Petersburg plant began to assemble TVs under the Doffler, Harper, Haier, Dexp brands. Some of them were previously assembled in Kaliningrad. For example, Doffler TVs ordered by the Moscow OOO "Kompania Rembyttehnika" were assembled at Kaliningrad "Alfa Story Komplekt" (having been dissolved since May 25, 2016). Haier TVs move from Kaliningrad OOO "Megabalt" to Shushary too.
The enclave without benefits
Since April 1, 2016 Russian enclave lost its special economic zone (SEZ) customs preferences. SEZ Act, passed in 1996, allowed importers to import components from Europe and China without payment of customs duties and fees and the value added tax. And then to export finished products made of foreign components to other regions of Russia duty-free.
"As soon as Kaliningrad was deprived of preferences, this immediately led to market conditions leveling for electronics contract manufacture in Russia. Many of our new customers came from Kaliningrad. First of all, due to the logistics, TVs manufacture here have become profitable”, CEO of TPV CIS Blazej Bernard Reiss says. “Everything indicates that 2017 will be much better for TPV than the previous year. We managed not only to preserve the plant, but also to attract new customers and to utilize production capacity twice as much in comparison with 2016".
Kaliningrad factories did not respond to the inquiry of "DP", phone numbers specified in the SPARK system (Professional Market and Company Analysis System) were not picked up in most cases. In Kaliningrad "Smart" (assembles Akai brand TVs) an accountant responded and said that the company's management was absent, because the line did not function that day, and the company’s capacity utilization reduced. But the source of "DP" refused to clarify the extent of reduction.
The Chinese strategy
Chinese TPV Technology launched assembly production of LCD TVs and monitors under Philips brand in Shushary in 2011 on the areas leased from AKM Logistic (20 ths m2). The volume of investments amounted to $ 30 million, or 900 million rubles. Two assembly lines are designed to produce 2 million TVs per year.
The plant operates in SKD mode, which means large parts of TV sets (panels, motherboards, cabinets) come to Shushary from China and Poland. At the plant, connector is soldered to the board, all parts of the future TV are connected with wires, put into the cabinet, the unit is fastened with screws, configured, tested and packed. All Russian TV assembly plants work according to this technology. The largest of them - OOO "LG Electronics RUS" and OOO "Samsung Electronics Rus Kaluga" – assemble the most popular Russian television sets LG and Samsung (see "Who produces TVs ....").
Manufacturers save on customs duties with the help of SKD. The duty on a TV-set is 10%, but not less than 25 euros. "The average level of localization in Russian plants ranges from 1 to 7% depending on the price of a product. Here television sets are only assembled and packed", Reiss explains. In his opinion, the localization depth could be increased by 10-15% due to mere increase of import duties on finished electronic components, boards. "Duties increase will be followed by manufacture localization. In recent years, many Russian defense enterprises received funds for modernization from the state budget. They bought equipment with great capacity margin. For example, the high-speed lines for printed-circuit boards surface mount. They are now idle or utilized no more than 10%. It is possible to utilize a line with civilian goods only by raising taxes. The way China did and, for example, Brazil does. We should do what is now being done in Russian automotive industry. But so far, manufacturers of household appliances and electronics, does not seem to be considered as an industry", Reiss complains.
The invisible industry
Official Russian statistics does not include data on the radio-electronic industry data. This tradition has been preserved from the Soviet era, when electronics was an important part of a secret military-industrial complex and civil products were produced in minimal quantities. Times have changed. Today, experts estimate the of Russian electronic products market capacity at 1 trillion rubles a year. The lion's share of that amount is taken by foreign electronic components manufacturers.
Officially, the share of imports in electronics in 2014 reduced from 75 to 38%, but the products released in RF consists of foreign components for more than 90%, admits Alexandr Loginov from "Power Machines" group. To establish the production of element base in Russia, companies should work on grand scales, producing millions of components per year - then Russian products prices will be comparable with the Chinese ones. But to provide such releases is possible only through entry into the global market, which is firmly held by Chinese suppliers, says Boris Yurkevich, the chief engineer at OOO "Lengidroproekt" (designing hydropower facilities equipped with electronics). "The winner is the one with the mass production. As long as we do not have it, our counterparts will be more expensive" - Boris Yurkevich recognizes.
Increased duties will only do an ill service, experts say, the component prices will shoot up, and the demand decreases anyway. Russian electronic components manufacturers reckon only on the Ministry of Defense, "Roskosmos" and other government agencies, ready to overpay for privacy. But they cannot provide high workload, which can only be arranged by civil electronics manufacturers.