d_08_consumer durables.pdf

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Report on Consumer Durables Industry

1

Report on

Consumer Durables Industry

Submitted by:

Section D- Group 08

C V Sreepradhaa 2014PGP089

Shaily Gupta IPM2011096

Pradeep Jasal IPM2011067

Deepak Gothwal IPM2011I016

Saurabh Anand IPM2011094

Priyanka Bhagat 2014PGP273


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Executive Summary

The report studies the consumer durables industry in India. The report is divided into three

parts

1. Industry Profile

2. Players' Profile

3. Macroeconomic Profile

The industry profile will give an overview of the industry .The Indian Consumer durables

segment can be categorized into three major groups namely: White Goods, Brown Goods and

Consumer Electronics. Consumer Durables Industry in India is expected to have a 19.6%

CAGR over the next few years. This growth can be attributed to two major factors (1)

increased penetration in rural market (2) increased number of innovations and replacement

demand in urban markets. India is soon set to become the fifth largest consumer durables

market in the world by 2025. Currently India is in twelfth position and by 2015 is expected to

reach USD 12.5 billion by 2015. India is one of the largest growing electronics market in the

world. By 2020, the electronics market in India is expected to increase to USD400 billion

from the current USD 69.6 billion with a CAGR of almost 24.4%. India has the worlds third

largest television industry. By 2016, the television industry in India is expected to expand to

USD12.6 billion from USD 7.4 billion in 2013 with a CAGR of 19.1%.

Secondly, the report talks about the profile of the various major players in the market, both in

financial aspect and with respect to their market share.

Thirdly the report elaborates on the current governmental policies related to Consumer

Durables Industry. With the increasing demand, supported by the government policies such

as liberalisation and FDI, investments in Consumer durables industry has increased

considerably. Apart from the international players, Indian players such as Godrej and

Videocon are also expanding globally.


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Sl.No Topic Page NoCover Page 1Summary on Consumer Durables Industry 2Table of Contents 3

I. Industry Profile1 Overview of the Industry 4

1.1 Consumer durables classification 41.2 Growth over last few years 41.3 Evolution of Indian Consumer Durables Sector 5

2 Technological trends and key growth drivers 63 Mergers and Acquisitions 74 Analysts view of Industry 8

4.1 PEST Analysis 84.2 Porters five forces for electronics industry in India 9

II Players' Profile1 Major Players' Profile 10

1.1 Company Profile 101.2 Market share by segments (Electronics) 11

1.3 Market share by segments (Appliances) 121.4 Indian Players 131.5 Key Products 13

2 Financial performance Indicators 14III Macroeconomic Profile

1 Government Policies 151.1 Industrial Approval Policy 151.2 Foreign Investment Policy 15

1.3 Fiscal Policy 161.4 Foreign Trade Policy 162 WTO Free Trade agreements 17

3Competition from foreign firms, opportunities inoverseas markets 18

3.1 Competition from foreign firms 183.2 Overseas marketing opportunities 18

References 19

Table of Contents


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I. INDUSTRY PROFILE

1. Overview of the IndustryConsumer durables - Consumer durables are a category of consumer products that do not

have to be purchased frequently because they are made to last for an extended period of time(typically more than three years).

1.1 Consumer durables classification

Consumer durables industry is mainly divided into three segments, white goods, brown

goods and consumer electronics . All segments are dominated by the global players

(MNCs), representing around 65 percent share in the domestic consumer durables market.

MNCs mainly targets middle class people and provide products with advanced technology as

compared to the Indian companies. Whereas, domestic players are competing on the basis of

their well acknowledged brands, firm grasp of Indian consumer durables market and a strong

hold over wide distribution network. Samsung and LG are dominant player across all

categories. Bajaj electronics, Voltage, Videocon industries and Godrej are some leading

domestic players currently operating in the industry.

1.2 Growth over last few years

Growth of the industry depends mainly upon economic growth of the country. If country is

growing faster than the industry is expected to grow faster. The consumer durables industry is

highly correlated to the economic scenario as its growth depends upon the consumers

disposal income. Over the past few years, strong Indian economic growth has pushed the

sector to double-digit growth.

White Goods Brown Goods Consumer Electronics

Refrigerators Irons TVs

Air conditioners Microwave ovens Mobile phones and digital cameras

Washing machines Electric fans Personal computers

Sewing machines Cooking products Electronics accessories

Watches and clocks chimneys LCDs/LEDs

Cleaning equipments Mixers and grinders DVDs and Camcorders

Other domestic appliances Audio and Video systems


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However at present scenario the Indian consumer durables industry is under pressure owing

to the prevailing economic slowdown, higher interest rate phase and rising inflation forcing

consumer to reduce their purchasing decision. Increase in inputs prices and strong

competition among players, has become key concerns for the industry. Growth in consumer

durables has remained negative for four consecutive months this fiscal year, which implies

that overall consumption spending is weak and may pose significant risk to the sustainability

of growth in the capital goods sector.

1.3 Evolution of Indian Consumer Durables Sector

0

2

4

6

810

12

14

3.8 4.24.7 5.2

6.37.3 7.35

8

10.2

12.5Growth In Industry$ Billion

Source: IBEF Consumer Durables Report March 2014

Urban65%

Rural35%

Revenue MarketShare

Source: IBEF Report March 2014

Pre-liberalisation(1980s and early1990s)

Closed market Increased

productavailability,increasedmedia

penetrationandadvertising

Liberalisation(Mid and late1990s) Liberalisation of

markets Influx of global

players such asLG andSamsung

Shift in focusfrom promotionto productinnovation

Growth(Early 2000s) Increasing

availability andaffordability ofconsumer finance

provides impetus togrowth

Low penetration ofhigh-end productssuch as airconditioners (3 %)

Introduction of new aspirational products such as HDTVs

Companies targeting highgrowth rural market

Source : Financial Ex ress, A liance Ma azine, Aranca Research


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2. Technological trends and key growth drivers

Television - CTVs are the largest contributors to this segment. Introduction of HDTVs is set

to drive demand growth from affluent consumers. With the invention of LCDs and LEDs,

market for LCD/LED TVs has increased from 4 million units in 2011 to 5.5 million units in

2012 and the same is projected to increase to 7 million units in 2013. The price decline due to

relatively low import duty on LCD panels, higher penetration levels, and the introduction of

small entry-size models are key growth drivers in the segment.

Refrigerators - Refrigerator sales stood approximately at 14 million units in 2013.This

segment makes upto 31 per cent of the consumer appliances market. The market share of

direct cool and frost free segment is 75 per cent and 25 per cent respectively. Key growthdrivers in this product are lower prices and rising demand for frost-free refrigerators.

Air Conditioners (ACs) - The Indian ACs market accounted for sales of 3.6 million units in

2013. ACs are perceived as high-end products; current penetration stands at 6.8 per cent. The

segment had a 13.0 per cent share (2013) in the consumer appliances market. High income

growth and rising demand for split ACs are the key growth drivers .

Mobile Phones - From the initial usage of phone for only communication purpose, the

product has come a long way through, wherein innovations have become common every day.

With internet, 3G, pay by phone, GPS, mobile entertainment and operating system, etc. the

mobile phone has become a mini computer on hand and the innovations continue to grow.

Washing appliances - Washing machines are the second largest contributor to the consumer

appliances market in FY13 total sales was 7.5 million units. Fully automatic washing

machines are garnering an increasing share of the market due to reduction in prices andhigher disposable incomes


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3. Mergers and Acquisitions

With rising GDP, and increase in disposable incomes, along with increase in exposure to

media and easily available consumer loans, firms seek to gain huge market shares in the

consumer durable goods industry. One way to expand and make their presence in various

sectors is mergers with and acquisitions of other firms in the industry. This often leads to

increase in diversity, capacity and even market share enjoyed by the firm.

Some recent developments as far as mergers and acquisitions in this industry go are:

Philips Electronics India Ltd wants to enhance its presence at all price points in the

business of medical equipment, and so is looking forward to the idea of entering into

partnerships, alliances and acquisitions with other firms.

Similarly, seeing the huge potential in India as Indian rural homes get electrified, Haier , the

Chinese white goods manufacturing giant, wanted to increase its presence in India back in

2008 when it had a mere 2% share in the Indian market. For this purpose it was looking

forward to acquisitions in India, and even in US to increase its global footprint. Haier had

acquired Anchor Daewoos appliance production unit in Pune. Haier is also looking forward

to expanding itself in North India by 2015, and in Southern India in the next 5-6 years.

Videocon , not behind in the fray, had submitted bids to acquire Webel Consumer Electronics,

a West Bengal state-owned firm. It had also acquired Kanchan foods in Siliguri which made

jams, jellies and pickles, so it could manufacture TVs there.

The Delhi based company of Maharaja Appliance Ltd had acquired the GEM brand of

Kelvinator so as to enter the white goods market. It launched televisions, refrigerators and

microwave ovens under this brand name.

LG electronics acquired webOS from Hewlett-Packard (HP) so as to boost its Smart TV

technology of the next generation. This allowed LG to use this technology as well as the

engineering talent pool of HP. LG also did acquisitions to form some of its major subsidies,

for instance, it acquired LS Mtron Air Conditioning Division to form LG Electronics Co.

Ltd., Image & Materials, Inc to form LG Display Co., Ltd., Gumi LGE TV factory and Gumi

LGE learning center to form LG Display Co., Ltd., and New Optics Ltd. to form LG Display

Co. Ltd.


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Samsung has been on a huge M&A spree,

spending more than US $1 billion in

acquiring 14 companies since 2010, and plans

to look out for more. In this era of increased

smartphones, Samsung is eyeing the

opportunity to become a software giant itself.

For this purpose it is also eyeing many start-

ups, especially in the Silicon Valley.

According to the Wall Street Journal online

article (dated Oct. 7, 2013 8:05 p.m. ET), Samsung i s eyeing firms like Unity Technologies,

a San Francisco-based developer of gaming platforms, and Green Throttle Games Inc., a

Santa Clara, Calif.-based company that makes game controllers and software that connects

mobile devices to television; Glympse, a Seattle-based company that allows users to share

their location with their friends and Tel Aviv- based mobile search engine Everything.me.

Samsung has been shifting its focus away from building capacity and capturing market share,

to developing new technologies and creating new markets.

Sony had made acquisitions worth more than US $4billion in 2012 alone by acquiring Sony

Ericsson, EMI Music Publishing company, Gaikai, So-net and Left Bank Pictures.

4. Analysts view of Industry

4.1 PEST Analysis

Political - Though 100% FDI consumer electronics has been allowed, change of political

parties at center and state level have effected and led down to roll backs of decision in

retailing.

Economic Disposable incomes have increased with both rural and urban consumers.

Various financing options like Buy on EMI and Low Interest Rates have increased

consumer spending in this sector.

Social - Increasing nuclear families has led to rapid growth in demand for electronics like TV

and refrigerator. Power cuts in rural areas are a major negative issue.

Technological Energy efficiency rules have become stringent last month, leading to need

for better technology at low prices. Online retail supply chain available at major cities of the

country.


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4.2 Porters five forces for electronics industry in India

Potential Entrant - The potential new entrant in the electronics market is low. There is huge

capital requirement for a firm to enter in this segment. As technology is advancing each day;

it is very difficult for new entrants to build technology advanced products right from the

beginning .It is very difficult for new entrants to match with major firms like LG, Samsung,

and Sony in terms of price and establish themselves. Because these firms can display panels

etc at a very less price due to efficient supply chain. As brand loyalty is moderate, this also

imposes entry threat on new entrants.

Bargaining Power of Suppliers As differentiation amongst the product is very low, and

switching cost is very low or not at all, this makes the supplier power to be on lower end. If

the inputs are changed i.e. input technology or other raw material, the firms cannot drastically

differentiate on prices in order to be competitive, so this also leads to reduced supplier power.

Bargaining power of customers - The bargaining power of buyer is high. With internet,

buyers have become more informative and educated regarding products and this leads to

increase in their power. There is medium to high price sensitivity of buyer. Since buyer are

generally very price sensitive, so this also leads to increase in buyer power. Buyers are more

informed and also influence buying decisions of other powers. Buyer switching cost is very

less; hence this also leads to increase in buyer power .

Threat of substitute products or services - Threat of substitutes are again from mid to high .

Due to changing technology, there is high threat of substitute products in this industry. As an

example, before 2010 consumer used CRT televisions. But after the innovation of Plasma,

LED and LCD TVs consumers have shifted to the newer generation products. Buyers easily

substitute if they get more technologically advanced product.

Intensity of competitive rivalry - The competitive rivalry is again very high .As industry is

highly technology oriented, innovation leads to sustainable competitive advantage. If LG is to

be evaluated on the competitive strategy then it will be that Samsung is more focussing on product innovations and diversification and they are quickly launching new products in

market. Sony is focussing on both quality and technology. Hence every firm has a different

strategy and core competencies which make their rivalry even more intensive.


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II. PLAYERS PROFILE 1. Major Players Profile

1.1 Company Profile

Sony India

Sony Corporation, Japan, established its India operation in November 1994. With Indias

growing economy Sonys electronics sales are growing faster than the countrys electronics

market, therefore in 2010 Sonys market share increased in the number of high - growth

product categories. In the period, BRAVIA captured the top shares of the market for LCD

television; a high growth product category in terms of value, while cyber-shot was number

one in the camera market in both value & volume sold & VAIO PCs rose to number three inthe PC market in value terms. In India, Sony has 19 sales branches that cover a total of 450

cities across the country, 250 service centers & 30 warehouses have established nationwide.

Samsung India

Samsung Electronics commenced its operations in India in December 1995 and is today a

leading provider of Consumer Electronics, IT and Telecom products in the Indian market. In

2010, Samsung India achieved a sales turnover of US$3.5 billion. Samsung India is a marketleader in product categories like LED TVs, LCD TVs, Slim TVs and Side by Side

Refrigerators. While it is the second largest mobile handset brand in India, it leads in the

smart phone segment in India.

ProductSamsung

shareLeading Competitor

Marketshare

Year

Mobile phones 35% Apple Inc. 13.40% Q3 2013LCD Monitors 18.00% Dell 12.80% 2009Large size LCD Panels 26.00% LG Display 25.90% Q3 2010Televisions(LCD,PDP,CRT,LE 17.20% LG Electronics 14.80% Q3 2009Digital Cameras 11.80% Sony 17.40% 2010

NAND Flash 40.40% Toshiba 33.10% Q2 2010

World Market Share - Samsung Vs Competitors

LG India

LG Electronics was established in 1958 and has since led the way into the advanced digital

era the technological expertise acquired by manufacturing many home appliances such as

radios and TVs. LG Electronics has unveiled many new products, applied new technologiesin the form of mobile devices and digital TVs in the 21st century and continues to reinforce


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its status as a global company. The company has as many as 27 R&D centers and design

centers.

Nokia India

Nokia began its India operations in 1995, and currently has office s in 10 of the countrys

major cities including, New Delhi, Mumbai, in Maharashtra and Kolkata, in West Bengal,

and Ahmadabad in Gujarat. Its operations include a handset business, a research and

development unit in the southern Indian city of Bangalore and a manufacturing facility in

Chennai also in south India.

Dell India

US computer major Dell Inc. has rolled out its first desktop computer from its new plant at

Sriperumbudur near Chennai, July 30, thereby making India the third country in Asia Pacific,

after China and Malaysia, to manufacture its range of desktop computers and notebooks

outside of the US. It has a big market share in China and India.

1.2 Market share by segments (Electronics):

20%

25%

21%

7%

27%

Top Television Brands MarketShare in India FY 12-13

LG

Samsung

Sony

Panasonic

Others

33%

27%

17%

5% 18%

Smartphone Global MarketShare

Samsung

Nokia

Apple

LG

Others

25%

22%

15%

14%

5%

19%

Computer- PC & laptop

Hewlett-PackardDell

IBM

Apple

Oracle

Others

61%13%

10%

5% 11%

LED TV Brand

Samsung

Sony

LG

Panasonic

Others


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1.3 Market share by segments (Appliances):

Whirlpool India

Whirlpool was established in 1911 as first commercial manufacturer of motorized washers to

the current market position of being world's number one manufacturer and marketer of major

home appliances. The parent company is headquartered at Benton Harbor, Michigan, USA

with a global presence in over 170 countries and manufacturing operation in 13 countries.

Today, Whirlpool is the most recognized brand in home appliances in India and holds a

market share of over 25%. The company owns three state-of-the-art manufacturing facilities

at Faridabad, Pondicherry and Pune. In the year ending in March '06, the annual turnover of

the company for its Indian enterprise was Rs.1,375 crores. According to IMRB surveys

Whirlpool enjoys the status of the single largest refrigerator and second largest washing

machine brand in India

31%

19%13%

12%

25%

Market Share in Washing MachineIndustry. India 2012-13

LG

Samsung

Whirlpool

Videocon

Others

18%11%

10%18%

6%

13%

24%

Market Share in Air ConditionerIndustry,India 2013

LG

Samsung

Godrej

Voltas

Bluestar

Panasonic

29%

18%8%

6%

11%

9%19%

Market Share in Microwave ovenindustry, india 2010-11

LG

Samsung

Whirlpool

Videocon

Onida

Godrej

29%

12%18%

18%

18%

5%

Market Share in Refrigeratorindustry, India 2012-13

LG

Whirlpool

Godrej

Samsung

Videocon

Others


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1.4 Indian Players

Videocon

Videocon Industries Limited is a large diversified Indian company headquartered in Gurgaon,

Haryana. The group has 17 manufacturing sites in India and plants in Mainland China,

Poland, Italy and Mexico. It claims to be the third largest picture tube manufacturer in the

world. The group is a US$5 billion global conglomerate. Since the entry of Korean and their

rising popularity in the Indian market, Videocon from a stand-point of market leader has seen

a slow decline to become a no 3 player in India. The company continues to do well in the

washing machine and refrigerator segment but has significantly lost ground in the consumer

electronics.

Godrej India

Godrej India was established in 1897. Incorporated with limited liability in 1932, the

company is one of the largest privately held diversified industrial corporations of India. The

company has a network of 38 company owned retail stores, more than 2200 wholesale

dealers and more than 18000 retail outlets. The company also has representative offices in

parts of the world such as UAE, Kenya, Saudi Arabia, Sri Lanka, China.

1.5 Key Products of the companies

Sony Samsung LG Godrej VideoconTelevision Projector Smartpones Television Refrigerators HDTVDigital Camera Tablet Mobile Washing machine LED TVTablet Video Camera Projectors Microwave Oven Split ACSmartphones IT-Peripherals Computers Air Conditioners RefrigeratorsVideo Camera Wearables Security Cameras Washing MachinesComputers Audio& Video Accessories MobilesHome Theatre System Microwave Refrigerators SmartphonesPlay Station Television TabletsStorage Media Accessories

Products of various Companies


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2. Financial Performance Indicators

LG India

Samsung India

Sony India

45

14

10

10

20

30

40

50

Jan-08 Jan-09 Jan-10

ROCE(%) RONW(%)

DEBT-EQUITY(%)

-40

-20

0

20

40

60

80


NET WORTH- growth % PAT - growth %

0

20

40

60

80

100


ROCE(%) RONW(%)

DEBT-EQUITY(%)

-200

-100

0

100

200

300

400



0

20

40

60

80


ROCE(%) RONW(%)

DEBT-EQUITY(%)

-15

-10

-5

0

5

10

15




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III. MACROECONOMIC PROFILE1. Government Policies

1.1 Industrial Approval Policy

The major highlights of Industrial Approval Policy include the following: Industrial Licensing has been abolished in the Electronics and Information

Technology sector except for manufacturing electronic aerospace and defence

equipment.

No reservation for public sector enterprises in the Electronics and Information

Technology industry and private sector investment are welcome

Electronics and Information Technology industry can be set up anywhere in the

country, subject to clearance from the authorities responsible for control of

environmental pollution and local zoning and land use regulations.

Large Industries (where investment in plant and machinery is more than Rs.10 crores)

and exempted from licensing are only required to file information in the Ministry of

Commerce & Industry, Government of India and obtain an acknowledgement. No

further approval is required.

Small Scale Industries (where investment in plant and machinery is more than Rs.25

lakh but less than Rs.5 crores) and Medium Industries (where investment in plant and

machinery is more than Rs. 5 crores but less than Rs. 10 crores) are required to

register with the District Industries Centre (DIC).

1.2 Foreign Investment Policy

India welcomes investors in Electronics and IT sector. Foreign equity in Indian companies

can be upto 100%. Government of India facilitates Foreign Direct Investment (FDI) and

investment from Non-Resident Indians (NRIs) including Overseas Corporate Bodies (OCBs),

predominantly owned by them to complement and supplement domestic investment.

Foreign Direct Investment upto 100% is allowed under the automatic route from

foreign/NRI investor without prior approval in most of the sectors including the services

sector. In pursuance of Governments commitment to further liberalise the Foreign Direct

Investment (FDI) regime, all items/activities have been placed under the automatic route for

FDI/NRI and OCB investment, except the following:

All proposals that require an Industrial Licence All proposals in which the foreign collaborator has a previous venture/tie up in India.


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All proposals relating to acquisition of shares in an existing Indian company in favour

of a foreign/NRI/OCB investor.

All proposals falling outside notified sectoral policy/caps or under sector in which

FDI is not permitted and/or whenever any investor chooses to make an application tothe FIPB and not to avail of the automatic route.

1.3 Fiscal Policy

The salient features of the Fiscal Policy as applicable to the Electronics Hardware Sector are

as follows:

Peak rate of customs duty is 10%. The customs duty on 217 Information Technology

Agreement (ITA-1) items* is zero%. The Agreement covers the following main

categories of products and components: Computers and peripherals;

Telecommunication equipment; Electronic components including semiconductors;

Semiconductor manufacturing equipment; Software and Scientific instruments.

Customs duty on specified raw materials / inputs used for manufacture of electronic

components and optical fibres and cables is 0%.

Customs duty on specified capital goods used for manufacture of electronic goods is

0%.

Customs duty on LCD Panels and Set Top Box is 5%.

Parts, components and accessories of mobile handsets including cellular phones are

exempted from basic customs duty and excise duty/CVD.

Microprocessors, Hard Disc Drives, Floppy Disc Drives, CD ROM Drives, DVD

Drives/DVD Writers, Flash Memory and Combo-Drives are exempted from excise

duty.

1.4 Foreign Trade Policy

In general, all Electronics and IT products are freely importable, with the exception of

some defence related items. All Electronics and IT products, in general, are freely

exportable, with the exception of a small negative list which includes items such as

high power microwave tubes, high end super computer and data processing security

equipment.

Second hand capital goods are freely importable.

Zero duty Export Promotion Capital Goods scheme (EPCG) which allows import of

capital goods at zero% customs duty is available to exporters of electronic products.

The export obligation under EPCG Scheme can also be fulfilled by the supply of


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Information Technology Agreement (ITA-1) items to the DTA provided the

realization is in free foreign exchange.

Special Economic Zones (SEZs) are being set up to enable hassle free manufacturing

and trading for export purposes. Sales from Domestic Tariff Area (DTA) to SEZs are

being treated as physical export. This entitles domestic suppliers to Drawback/ DEPB

benefits, CST exemption and Service Tax exemption.

The import of second hand computers including personal computers/ laptops and

refurbished/reconditioned spares are restricted for import. However, second hand

computers, laptops and computer peripherals including printer, plotter, scanner,

monitor, keyboard and storage units can be imported freely as donations by certain

category of donees, subject to the condition that the goods shall not be used for any

commercial purpose and are non-transferable.

2. WTO Free Trade agreements

Under this WTO proposal, trading partners reduce import duty to zero in some sectors with

immediate effect on a voluntary basis. This is a relatively new and much contested proposal

even in the WTO which may be replicated in some FTAs. At the WTO, efforts have been

made by the developed countries to turn this into a compulsory commitment rather than a

voluntary one, especially from countries like India and China. There are currently 14 sectors

under consideration, of which electronics also forms a part of. The discussion on April 29 of

WTO saw EU proposing a new text on sectorals with cuts being proposed in three sectors;

chemicals, electronics and industrial machinery where developing countries are asked to

make cuts beyond the formulae cut, matching with those by developed countries. Under

FTAs, since most segments see duties reduced to zero, it is actually close to what sectorals

are to cover under the WTO. But under FTAs some segments may see zero duty on both sides

with immediate effect. For example in the India-Japan CEPA, textiles is opened up

immediately on a zero for zero basis. The difference with WTO sectorals is that a lot moretariff lines are offered on a zero duty basis under FTAs, some with immediate effect. On the

other hand, unlike the WTO where concessions are made to many members, these may be

made to only one partner at a time. The industry must be fully competitive in order to open

up under this provision. It is important for MSMEs to discuss how competitive they are and

whether they are ready to take on zero-for-zero cuts in import duty with immediate effect

under FTAs.


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3. Competition from foreign firms, opportunities in overseas markets

3.1 Competition from foreign firms

Havells is one of several Indian companies to have shifted production or sourcing from

China, as costs climb in the Middle Kingdom. Consumer appliances company Godrej,

mobile-phone maker Micromax, auto-parts maker Bosch and stationery manufacturer ITC

have all started expanding or exploring manufacturing operations in India. Chinese

companies, too, are forming joint ventures with Indian partners to set up production bases in

the country. 16 companies that have already shifted part of their production from China to

India and a few more which said they were considering a similar move to take advantage of

lower Indian labor costs and favorable currency movements. Chinese costs are going up. This

is a great time to move production from China to India," says Adi Godrej, Chairman of the

Godrej Group, which has shifted air conditioner and washing machine production to India.

He thinks the trend will continue for 20 years. "The earlier India leverages this trend, the

better off we will be. If we don't leverage it soon, other countries will do it better."

Other countries, in fact, are already benefiting as China begins to lose the competitive

advantage that lured companies from across the world. An estimated 100 million jobs will

move out of China over the next few years in labour-intensive sectors, says Ajay Shankar,

Member Secretary of India's National Manufacturing Competitiveness Council. Many US,

European and Japanese companies are shifting production from China to lower-cost locations

such as Southeast Asia. A boom in shale gas output in the US has prompted many companies

to move production back to America. The trend in India is on a much smaller scale and

doesn't yet reflect in the country's manufacturing output.

3.2 Overseas marketing opportunities

There have been attempts in the past to bring in renowned Indians living overseas to invest.However, this has not paid off so far, especially in electronics. Now, compare this situation

with China, Korea and Taiwan. The electronics manufacturing sector rules in those countries.

So far, we have witnessed MNCs come in and set examples of quick ramp-ups with

developed ecosystems. Perhaps, local Indian electronics companies need to try and follow

this example. Perhaps, the Indian Government should come out with a strong electronics

policy to protect Indian manufacturers, initially, in the early stages, by duty exemptions on

raw materials and equipment. There could also be a situation where local content ingovernment projects becomes mandatory.


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References / Data Sources

CEAMA, Asian Development Bank, Aranca research;

Ace Analyser Portal for Company Data Bank 2014; http://www.aceanalyser.com/ (as on

23 August,2014)

Business Monitor International, Consumer Durables Industry (2013) ;

http://bmo4.businessmonitor.com/cgi-bin/request.pl (as on 23 August,2014)

Financial Express, Appliance Magazine, Aranca research;

Consumer Durables Sector report, March (2014) by Indian Brand Equity Foundation;

http://www.ibef.org/industry/indian-consumer-market.aspx (as on 23 August,2014)

CEAMA, Corporate Catalyst India- Consumer Durables Industry in India report;

Electronics Industries Association of India; http://www.elcina.com/industry_size.asp (as

on 23 August,2014)

Department of Electronics and Information Technology, Ministry of communications &

IT, Govt. Of India. http://deity.gov.in/content/policies-1 (as on 23 August,2014)

Company Website- Samsung India ; http://www.samsung.com/in/ (as on 23

August,2014)

Company Website- LG India ; http://www.lg.com/ (as on 23 August,2014)

Company Website- Nokia India; http://www.nokia.com/global/products/ (as on 23

August,2014)

Survey reports- CCI- Consumer durables India; http://www.cci.in/pdfs/surveys-

reports/Consumer-Durables-Industry-in-India.pdf (as on 23 August,2014)

Television- survey reports- Top brands in India; http://www.currentweek.com/top-

television-brands-in-india-market-2013-trends-market-share-in-lcd-led-plasma-tvs-

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Consumer preferences, Hardware Zone- Tech Awards results;

http://www.hardwarezone.com.sg/feature-hwmhardwarezonecom-tech-awards-

2013-readers-choice-results/readers-choice-awards-consumer-electronics-part-3-1

(as on 23 August,2014)

Mergers & Acquisition, Economic Times 18 th February, 2014

http://articles.economictimes.indiatimes.com/2014-02-18/news/47451260_1_haier-india-

pune-plant-100-crore (as on 23 August,2014)

Mergers & Acquisition, Economic Times 10 th August, 2007

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20/20


20

Mergers & Acquisition, Economic Times 09 th August, 2007

http://articles.economictimes.indiatimes.com/2007-08-

09/news/28402403_1_manufacturing-unit-haier-appliances-durable-maker-haier-today

(as on 23 August,2014)

Mergers & Acquisition, Economic Times 23 rd January, 2008

http://articles.economictimes.indiatimes.com/2008-01-23/news/27698416_1_haier-

appliances-india-anchor-daewoo-indian-market (as on 23 August,2014)

Business Stories, Business Line 14 th June, 2008

http://www.thehindubusinessline.in/2008/06/14/stories/2008061451390300.htm (as on

23 August,2014)

Report News, DNAIndia http://www.dnaindia.com/money/report-maharaja-buys-

kelvinator-s-gem-brand-1006951 (as on 23 August,2014)

Mergers & Acquisition, Economic Times 05 th December, 2006

http://articles.economictimes.indiatimes.com/2006-12-

05/news/27461531_1_manufacturing-unit-videocon-bid (as on 23 August,2014)

Mergers & Acquisition, Economic Times http://www.zdnet.com/samsung-hungry-for-

acquisitions-r-and-d-for-new-growth-7000022858/ (as on 23 August,2014)

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http://en.wikipedia.org/wiki/List_of_acquisitions_by_Sony_Corporation (as on 23

August,2014)

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d_08_consumer durables.pdf

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