The sudden influx of a number of Chinese products, as diversified as poultry and home appliances, has started a price war which is welcomed by customers on the one hand, and challenges for local businesses on the other. Many see the sudden influx of these much lower-priced products as a preamble to the opening of free trade under the WTO regime still 19 months away.

CHICKEN IMPORTS

Around 25,000 tons of processed Chinese chicken has already been imported into the country while the import of another 25,000 tons of the cut, frozen and packed poultry is in the pipe line, the chairman of Pakistan Poultry Association Afsar Qadri told PAGE. After paying the import duties and all other taxes the landed cost of the ready-to-eat imported poultry meat works out to just Rs 78 per kilogram almost matching the retail price of live broiler in the local market on the 23rd of last month and way below the retail price of chicken meat available in the local market.

Afsar said that the chicken meat is imported by a fast-food company and is primarily meant for non-personal use mainly by the importer itself and by catering services, hotels and restaurants. He denied that the reduction in the retail prices of live broilers and its meat in the local market has anything to do with the imports saying that it is primarily driven by "over production and fluctuation in the prices which is all too routine. Due to its small penetration the imported poultry meat would have no impact on its retail price in a market which primarily comprises individual users."

Routine or not, the retail prices of poultry have registered a welcome downward trend for the relief of consumers in last three weeks. The retail prices of live broilers as well as its meat has been on a constant rise since the lifting of the ban imposed on serving of meals in the wedding and related ceremonies a few months ago. On the 23rd of last month, the retail price of live broiler touched an unaffordable level of Rs 75 per kilogram but started to show a downward trend to came down to Rs 58 per kilogram as these lines are written on June 13. What can explain the reduction in the retail price of live broilers by a drastic 25 per cent within a short span of just 21 days? Though the use of imported poultry is primarily restricted to a catering, hotels and restaurants, and despite the fact that most of the consumers are don't even aware of its presence, the substantial reduction in the prices of chicken, and poultry meat, in the local market has certainly benefited the people.

 

 

HOME APPLIANCES

Till recently, air conditioners, particularly the expensive split version carried an aura of 'status symbol.' The prices of both the window and split versions of air conditioners has come down drastically due mainly, once again, to heating up of competition in this particular segment of the market fueled mainly by presence of inexpensive products, many of them made in China for the local companies.

The prices of split air conditioner which remained at an unaffordable level of Rs 60,000 and above over the years have suddenly been cut by less than half. The retail prices of splits have come down to an affordable level in the range of Rs 25,000 and above and the icing on the cake is that many banks and leasing companies are ready to finance the purchase on easy terms and small down payments.

Talking to PAGE, the marketing manager of Korean Samsung electronics company which imports a range of electrical and electronics goods from Korea, Ehtesham Albari, said that the ongoing 'price war' in the air conditioner segment of the home appliance market is fueled by a number of local companies who have contracts with Chinese companies to manufacture their brands.

"These are adhoc imports, which though not illegal seem to compromise on the quality to undermine the entire market as air conditioner is the core product for any company, marketing electrical and home appliances in the country. Besides, the lesser known local companies, manufacturers of a number of known brands and numerous unknown brands are imported Chinese products under various names to make the situation even more worse.

"In a price-driven market where there are no qualms on the part of the marketers to readily compromise on quality how can a multinational company like us can compete. The market of home appliances in Pakistan has become a much disturbed market and we fear that it would get worse in next two years. We feel that the competition would heat up even more in coming months resulting in further reduction in prices. As is, our distributors are forced to narrow down their margins to compete with the low-priced imported brands."

Sources also said that one of the major reason of the influx of Chinese home appliances is the rampant under-invoicing and mis-declaration of imports through the Sust border. Muhammad Aslam Khan, an importer of electrical and electronics good, said that massive imports through the Sust border and the rampant under-invoicing and mis-declaration has turned the up-country cities of Peshawar, Rawalpindi, Faisalabad and Lahore in big distribution centres of these under-invoiced and mis-declared imports and dry-ports located in the provinces of NWFP and Punjab are serving as its hoarding grounds. "Unlike the rest of the world the dry-ports in Pakistan are used to facilitate imports instead of promoting exports."