Moscow, 9 July 1997 (RFE/RL) - There are almost 150 million people in Russia and, according to a recent survey of households across the country, nine out of 10 of them say they already own a color television set. Roughly the same proportion of the population told another survey of Russian household habits that they watch TV every single day.
But if you enter an average Russian apartment and ask TV watchers what they are thinking of buying in the next six months, a color TV set is still at the top of almost everyone's list. That's because the set they are watching is likely to be Russian-made, and most Russians want to swap it for a foreign import.
Technologically speaking, Western engineers say there is no reason why Russian-made sets could not be manufactured to Western standards. But for the time being, Russian viewers don't believe it. And Russian TV manufacturers haven't the money to invest in redesigning their models to convince them otherwise.
But Russians will buy a set that says something in Japanese or Korean on the outside, even if its innards are assembled by Russian hands in a factory close by. That reality is worth roughly $1 billion each year to the Russian TV market, the biggest and fastest-growing in Europe.
At peak capacity, the Soviet Union turned out roughly 12 million TV sets every year. Russia by itself was producing roughly half that number, between five and six million. In 1991, when the USSR collapsed, the screens went blank in the Russian TV industry. Domestic output today is estimated to be less than 10 percent of what it once was.
As a result, imports have flooded in. According to Alexei Ruzhin, a government trade official, officially recorded imports of South Korean TV sets rose beyond $150 million in 1996, 50 percent up on the year before. In all, the government believes 2.5 million TV sets were imported last year, and that annual growth this year will be 20 percent. This means that, even according to the official trade statistics, Russia is paying at least $500 million a year for TV imports. Unofficially, dealers believe the real import volume is five million units -- about what Russian production was in the good old days. The value of these imports is between $800 million and $1 billion.
Asian manufacturers dominate the Russian TV business, with 15 of the top 20 brand-names. Sony, which started its Russian marketing earliest, holds the top spot, with 19 percent of the dollar value of sales. Twelve other Japanese brands follow Sony in the top 20.
If market share is calculated according to the number of sets sold, the biggest seller in Russia is South Korea's Samsung, with 16 percent. Gold Star (LG) and Daewoo are the other Korean brand-names in the market, though they have been trailing well behind, with roughly nine percent each.
Among the European competitors, Philips of the Netherlands is strongest, almost equal to Sony. Telefunken and Grundig of Germany come far behind, along with Thomson of France.
Philips and Sony are relatively confident of holding on to their large shares of the market, with higher-priced sets selling to higher-income Russians. The real battle, everyone in the industry agrees, is for the mid-priced and low-priced brand-names.
Starting in 1995, the South Korean firms Daewoo, Samsung, and LG Electronics attacked the Russian market aggressively, advertising their brand-names and cutting prices. They picked up an estimated 25 percent share of television sales overall. This year, as they raised prices slightly, the Koreans came under challenge from even lower-priced producers, such as the Chinese and the Malaysians (or Chinese using Malaysian plants and Western brand-names), who have been copying the marketing tactics of the Koreans. Roughly 40 percent of the Russian market is open to this free-for-all, in which all of the Asian brands are competing.
But the Asian manufacturers believe it's only a matter of time before the government in Moscow cracks down on the so-called gray market and raises import tariffs to favor domestic production. In gray market, imported sets are sold at low prices made possible only because of bribery, theft and smuggling.
This is the reason for an important shift now under way in the Russian television market. Manufacturers are increasingly importing sets in kits, which are then assembled in local factories. It's a move that requires relatively little investment to be successful. And none of the assemblers were television manufacturers before.