TV Set Production in Russia
Russian domestic TV set production achieved its peak by 1990 when Russian-made products reached 4.7 mln. units. The production started falling after that: 310,000 units were manufactured in 1996 and for the first 6 months of 1997 it went down 2 times as compared with the corresponding period of 1996 - to 88,900 units. It was symptomatic that black and white TV sets were most competitive and their number reached 45,000 units. Production of color TV sets declined for the same period to 43,800 units, out of which 25,700 sets were assembled from imported parts.
The decline of TV sets production by specialised radio-plants also is explained by their non-competitiveness in respect of technical parameters, design, ergonomics and quality as compared with imported products. At the same time the output of TV sets by metalworking plants and military-industrial complex had also contracted sharply. According to Goskomstat data, the production of TV sets for the first 6 months of 1997 had gone down as much as 3 times. Those facts support the conclusions arrived at by the VNIKI Centre of marketing research that successful assembly production from imported parts was feasible only under conditions of sufficiently large volume of output which makes it possible to lower (optimise) production costs, consequent transfer from SKD to CKD coupled with a policy of import replacement to decrease manufacturing costs.
And last but not least, the producers would need possess and develop their own product which was able to meet modern international requirements. Only then it would become possible to withstand competition from imported goods and increase domestic sales. However due to different reasons by mid-1997 not a single Russian producer had such a development plan and it would be logical to state that TV production in this Russia had been virtually stopped at that time.
The great turning-point for many manufacturers came with the financial crash of August 1998. The ruble depreciated fourfold, pricing imported consumer goods out of Russian markets and slashing real local costs. Before the crash, Russian television buyers were flocking to imports from Sony, Panasonic, Samsung and Philips. Russian television factories had come almost to a standstill. After producing about 4.5m sets in 1990, Russian factories managed perhaps 100,000 in 1997.
In the following four years Russian televisions staged a comeback - helped not only by better economic conditions but also by new owners and new attitudes in the factories.
In 1997 private investors bought the Rubin factory in Moscow, which had made Russia's best-regarded television sets in Soviet times. Rubin was about to totter into bankruptcy. The new team paid off tax debts, pared down staff and ended up with an interesting two-way bet: a manufacturing company crying out to be turned round and, if that failed, several acres of prime real estate to the west of Moscow.
The investors had it both ways. After buying the plant, they bought an electronics factory near Voronezh in western Russia that was struggling to produce video-recorders. They converted this to make television sets and moved the main Rubin production line there, keeping managerial and design offices in Moscow. The liberated factory space has been renovated and rented out as a shopping centre. From next to no sets in 1997, Rubin made about 400,000 in 2001, and Alex Miliawski, the company's deputy general director, expected to make least 625,000 in 2002.
Rubin sets sell because they are cheaper than the foreign competition. But the discount was not all that big, because 80 percent of the components for each set had to be imported. The result was that a Rubin cost only about 15 per cent less than the foreign competition in the shops.
Rubin, the former Russian television factory, rents out its old factory site for use as a popular CD and software market in Moscow. The market, nicknamed Gorbushka, moved to the factory building in 2000 from a nearby park after Rubin, known for making Soviet-era TV sets, abandonned the loss-making facility. While most Soviet electronics factories folded after unsuccessful attempts to adapt to the market in the 1990s, Rubin managed to survive after it realised the potential of renting out 150,000 square meters of the real estate it owned. The market occupies a sprawling Soviet-era complex in western Moscow, where hundreds of traders sell goods from used mobile phones to cars but which is best known as a place to buy pirated versions of the latest Hollywood movie on DVD for about $3. The trading complex is the main asset of Rubin, which values its real estate portfolio at $400 million. Rubin said its first half 2006 net profit amounted to 130 million roubles ($4.8 million).
Voronezh plant "videophone" is equipped with the most contemporary and technologically effective assembly lines. Production process is maximally automated, which practically excludes the influence of human factor on the quality of output. "Videophone" was built at the beginning of the 1990s. The technical equipment of plant ensured the world famous company Of philips, whose name it guarantees the excellent job of all automation lines of enterprise. It was decided in 2001 to transfer into Voronezh the basic production capacities of television sets under the brand Rubin.
The commercial brand Rubin is the largest Russian brand of television technology. Having long history, the television sets Of rubin use the deserved confidence of users, because of their outstanding characteristics and quality, which is not inferior to foreign analogs. Since 1999 fundamental production base joint stock company "MTZ ruby" was concentrated at the Voronezh plant "Videophone". Volume of output reached 12 thousand television sets per month. In 2001 volumes of the production of plant reached 200 thousand per year. A total of 865 thousand television sets were produced in 2004, after increasing this index by 11,7% in comparison with the previous year. At the end 2005 at the plant "Videophone" is past the solemn ceremony, dedicated to the production of the three-millionth television set. By 2005 United Russia had 28 deputies in the new City Duma, up from 20 before the elections. The new faces included businessmen Alexander Milyavsky, director of the Rubin television factory. Company "Rubin" actively collaborates with such respected companies as: LG; Philips Semiconductors; LG Philips Display; Toshiba; Samsung Electronics; LG Cable; BASF; BP; Sanyo; Daewoo Electronics; and ST (Semiconductors Tomson). This partnership makes possible for company to create high-quality digital products, to improve its production, to derive all progressive technological models of different technology for the market, to enlarge the commercial rule of output.
By 2003 a third of all Russian televisions were produced at the Telebalt assembly plant in the Kaliningrad Region, the Russian enclave on the Baltic coast. Other manufactures of TV- and high-tech household appliances in the Kaliningrad Region were OOO "Stella Plus", OOO "Baltmikst", OOO "Radioimport-P", and Regional Non-Governmental Organization "Televolna". By 2007 the Telebalt TV plant in Kaliningrad made about a million picture-tube LCD and plasma TV sets a year.
By 2007 picture-tube TV sets were becoming obsolete due to cheaper LCD and plasma panels. LCD TV sets, which cost 55,000 to 60,000 rubles ($2,000 to $2,500) in 2005, sold for only about 30,000 rubles ($1,500) in 2007. Russians bought about 240,000 plasma televisions for $670 million in 2006. By2007 Samsung Electronics controlled 20.4% of the Russian LCD TV market last fall, followed by Philips, Sharp, Sony, Toshiba and LG with 19.4%, 14.2%, 8.8%, 8.5% and 7.9%, respectively -- that is, these six companies accounted for about 80% of the market.
In mid 2007 Samsung Electronics Co. and LG Electronics Inc. announced plans to assemble plasma televisions in Russia's Kaliningrad region. Samsung would start assembly at the Telebalt plant in July 2007 and LG would start at the Rolsen plant in August. Local production of plasma televisions would cut the retail price by between 10 percent and 20 percent from the current 30,000 rubles ($1,160).
Kaliningrad is a special economic zone and manufacturers are exempt from import duties on components and value added taxes. Due to the disintegration of the Soviet Union, the Kaliningrad region with a population of one million became isolated from the Russian mainland. After the EU enlargement in 2004, the Kaliningrad region became surrounded by the EU, since it is sandwiched between Lithuania and Poland. In 2005 Kaliningrad's sales to the Russian mainland reached a record high of USD 1.8 billion, being almost over 60 per cent higher than a year earlier. The sales to the mainland were very concentrated. Three products - TV's, meat and fish products - accounted for 40 percent of these sales. Sales to the mainland had increased faster than imports to the region. This ratio illustrates the 'old' SEZ is not only a transit region to the Russian mainland, but an increasing amount of value adding takes place in the region.
Saransky TV Plant is one of the biggest production facilities of the former USSR. Project capacity of the plant allows to produce up to 1,5 - 2 mln. units of durable consumer goods annually. In terms of the design and structure it resembles "Rubin TV Plant" in Moscow. Currently the plant is a property of Sistema JSFC, which is the biggest corporation in Russia working in high-tech field (~2 bln. turnover in 2002, see also www.sistema.ru). After it was incorporated into Sistema JSFC, the plant has passed the procedures of the improvement of it's financial and personnel structures, and tough necessary refurbishment of production lines. Saransky TV Plant is located in the city of Saransk (population 0,3 mln.), which is administrative center of the Republic of Mordovia (population ~1.5 mln.). Republic of Mordovia is located in the center of Privolzhsky administrative sector.
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