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Future of the electronics market bright

Increasing demand for new high technology products and changing lifestyles tilting towards greater dependence on modern technology are the real stimulants that will keep the cogwheel of the electronics market moving.

Hamad Buamim, Director General, Dubai Chamber of Commerce and Industry, answers Khaleej Times questions on the various aspects of the consumer electronics business:

UAE retains its position as a leading global consumer electronics market. What are the factors that have contributed to the same?

The UAE’s strategic location, which connects it with the Middle East, the Indian sub-continent, Eastern Europe and North African regions, provides favourable conditions for the consumer electronics market to flourish. The upswing in demand for consumer electronics is also attributed to strong household consumption of Emiratis, expatriate wealth and inflows of tourists to the country.

Dubai being the major port of entry of consumer electronics into the UAE, the emirate’s role as the region’s major trade hub puts the country in the forefront of the global electronics market.

The strategic city’s strong electronics business groups, presence of regional distribution offices of leading electronics manufacturers, assembling of electronic products for domestic utilisation as well as its re-exporting facilities are some of the factors contributing directly to the growth of the country’s consumer electronics market.

How has the domestic market in the UAE steadily become more significant in relation to re-export trade?

About 40 percent of imported consumer electronics find its way into the domestic market. This significant domestic demand increases the volume of imports, thus making re-export prices competitive.

According to a data released by Business Monitor International (BMI), in 2010, TV sets, digital camera and VCR Players accounted for about 81 percent of the UAE’s consumer electronics spending, followed by computers and audio video (AV) devices which explains the rise of the domestic market in the country in comparison to its re-export trade.

Why is there a demand for consumer electronics? What are the figures for 2011? What is the forecast for the future?

Over the last decade, the demand for consumer electronics has increased beyond expectations thanks to the local demand created by residents and tourists alike as well as the UAE’s strategic location as a major re-export hub in the region, which together support the growth of the consumer electronics market. The rise in the availability of assembling facilities of electronic products for domestic utilisation has also fanned the demand locally.

The trade statistics on consumer electronics for Dubai for the period from January to October 2011 was Dh26.2 billion including imports of Dh15.9 billion and re-export of Dh10.3 billion.

According to a Dubai Chamber study, UAE sales of consumer electronics are predicted to rise from $3.14 billion in 2011 to $3.97 billion by 2015. The increase has been driven by popular electronic devices such as computers, LED and 3G TV sets, 3G mobile phone handsets, smart phones, feature-rich notebooks and Blu-ray format DVD players.

What are the challenges faced by the consumer electronics industry?

The major challenge faced by the consumer electronics industry is the fast changing nature of the technology industry as new and upgraded products from various manufacturers flood the market. The retailers’ woes are further exacerbated due to low profit margins in the wake of tough competition, changing structures of retail outlets and competition faced by local manufacturers and assemblers from foreign imports.

Another reason is the unrest in the region which has seen a slowdown in re-exports to certain markets in the Middle East.

How do parallel imports pose a challenge?

With the UAE and Dubai’s imports coming directly from the major manufacturing countries, parallel imports do not pose serious threat to the country’s trading activities.

The following countries supply more than 90 percent of Dubai’s imports of consumer electronics: Malaysia, China, South Korea, Japan, Taiwan, Thailand, Indonesia, Austria, US and Germany.

What is the future of the consumer electronics market?

Going by the estimated high sales figures and success of international exhibitions like GITEX, which contributes heavily in the rising demand of consumer electronics and new and exciting products coming out of the market regularly, the future of the electronic market is bright as ever.

What are the stimulants?

Increasing disposable income in the region on the back of increasing oil prices, spending on technology typically rises as consumers tend to become more service-focused. Also, increasing demand for new high technology products and changing lifestyles tilting towards greater dependence on modern technology are the real stimulants that will keep the cogwheel of the electronics market moving.