Mon, 05 Jun 2000

Electronic sales to reach precrisis level in two years

JAKARTA (JP): Sales of electronics goods, especially audio video products, have shown significant growth in recent months but it will take two years to bring them back to precrisis levels, according to market research and consultant firm AMI Business Consulting.

The entrance of new players with lower priced merchandises into the domestic electronics market, however, will bring fiercer competition, the company said in a report on the results from a recent market survey it made.

The survey was conducted on local sales of different brands of color televisions, video compact disc (VCD) players, digital video disc (DVD) players, projection televisions and multimedia set-top boxes.

The survey found that business in the audio video sector started to rebound last year in line with the gradual recovery of consumer confidence, a revival of consumer financing companies and more stable exchange rates.

"Looking at these indications, people in these particular electronic goods businesses believe that their sales will return to precrisis levels by 2002," the company said.

The electronic audio video business reached rock bottom in 1998, when sales of color televisions fell to only 500,000 units, projection televisions 445 units, VCD players 200,000 units and DVD players 4,000 units.

The company projected that in 2002 sales of color televisions would exceed 2.24 million units, projection televisions around 1,400 units, VCD players over 300,000 units and DVD players nearly 18,500 units.

AMI Business Consulting, which is a member of the Asia-based market survey and consultant firm Asia Market Intelligence, attributed its optimistic outlook on VCD player sales to an expected sharp increase in the supply of the product in the coming years.

The future supply of VCD players will lead to a decrease in their price, making the products more affordable for customers, the company said.

As for the multimedia set-top box, the company said retailers of such products would enjoy very rapid growth over the next few years thanks to the expected robust development in the country's Internet and multimedia sectors.

Set-top boxes have just been introduced here to a particular marker segment who want to use their television sets instead of personal computers to access the Internet. The products -- a decoder and a converter -- allow a television to function like a computer.

The company projected sales of the decoder unit to grow by 200 percent per year until 2002 and the converter by 90 percent per year. Overall, sales of set-top boxes are expected to reach 75,000 units in 2002, as against 8,000 units in 1998.

The company said intense competition would mostly take place in the color television and VCD player markets.

It said Japanese and Korean color television sets, which currently dominate the Indonesian market, would face tough competition from newly introduced Chinese products.

Chinese color televisions are seen as serious threat because they are sold much cheaper than Japanese and Korean products.

"The problem is that some of the market segments have changed their buying behavior as an impact of the country's financial crisis and switched to the less expensive televisions, disregarding the brands," the company said.

The competition in the VCD player market is expected to escalate in line with the entrance of new, cheaper brands and models. Currently, there are over 24 brands of VCD players competing in the local market.

As well as the tough competition from new comers, established electronics producers and retailers will also face problems derived from the entrance of cheap smuggled goods to the market.

The company said the smuggling of electronic goods was difficult to handle, partly due to Indonesia's size, but the government must try to curb it because it distorts the local market.(cst)