INSIDe Bangkok Electronica 2006: Power Mall’s annual fair for consumer electronics.

2007 is expected to be another tough year for the electrical-appliance and audio-visual (AV) sector, with signs of continued dampened consumer confidence and brutal price competition.

Manufacturers also fear that personal finance firms will be more selective in offering loans, creating another negative factor.

Toshiba Thailand recently forecast the sector would grow 5-8 per cent next year, following expected growth this year of 7-8 per cent. The total value of the market for audio-visual products and electrical appliances is expected to reach Bt70 billion this year, plus another Bt50 billion for IT products.

Toshiba Thailand vice president Nattaphong Areekul said his company expected sales of its electrical appliances to grow from Bt4.4 billion this year to Bt5 billion next year.

"We've witnessed tough price competition this year," he said. "The price of LCD television sets has dropped 50-60 per cent and almost 20 per cent for washing machines.

"We've seen no signs of economic improvement for next year, while the cost of raw materials used in the assembly of electrical appliances, such as plastic, copper and compressors, is constantly increasing," said Nattaphong. "The confidence of Thai consumers is still not good, and since prices for electrical appliances have been gradually dropping, consumers have been delaying purchases to wait for cheaper prices."

However, Toshiba Thailand will focus on introducing new "green" products next year for the sake of the environment.

"We'll focus on launching products that can be recycled and use less material as well as save energy," he said, adding that all products would qualify for Restriction of Hazardous Substances certification.

Panasonic's CEO for Thailand, Daizo Ito, said his company remained confident in a good market potential next year.

"We have no worries about consumer spending next year, because Panasonic sells products that really are demanded by Thai consumers for their daily life," said Ito. "Our products are also energy-saving and environmental-friendly. These benefits have been recognised by individual consumers."

Ito said Panasonic also received strong support from its dealers round the country, and Thai customers trusted the brand. As well, Panasonic will spend almost Bt2 billion in marketing next year.

"We are quite concerned about some negative factors next year, including the increasing cost of raw materials, such as copper and zinc. The baht appreciation may also affect our exports," he said.

He forecast that the domestic consumer-electronics market would grow about 3 per cent next year.

Apichart Assavapokee, chief merchandising officer for The Mall Group, called price dumping a problem. "It's a key tactic used by our major retail competitors, because many suppliers of electrical appliances have failed to control their retail prices. So, we [Power Mall] must match their prices."

Apichart said the price of 37-inch LCD television sets had tumbled over the past couple of years, from more than Bt180,000 to between Bt50,000 and Bt60,000.

The Mall Group expects its Power Mall, which sells electrical appliances, to grow only 5 per cent next year, amounting to sales of Bt7 billion.

Apichart said the total value of the electrical-appliance market was expected to reach Bt80 billion this year. Sixty per cent of electrical appliances and AV products are bought using credit cards, 20 per cent of buyers opt to pay by instalments, and only 20 per cent pay cash.

"We don't expect dramatic growth next year, but we want our growth to be sustained. We will be cautious and opt for stability in any business move," Apichart said. "We would like to make Power Mall a retail outlet offering a greater variety of products at competitive prices."

He said consumer finance companies would also be more selective in providing loans next year, in order to avoid increasing their bad debts.

Power Mall has organised an annual fair for consumer electronics, called Bangkok Electronica 2007, being held from now to January 4 on the fourth floor of The Mall Bang Kapi and Bang Khae. Major brands like Sony, Samsung, Panasonic, LG and Mitsubishi are demonstrating and selling their latest products, including MP3 and MP4 portable players and LCD televisions, at price discounts of 20-30 per cent.

Philips Electronics (Thailand) CEO Jan Eggebeen said his company expected consumer confidence and spending power to grow slightly next year.

He said the total consumer-electronics market this year should record growth of 6 per cent. Philips plans to maintain double-digit growth, year on year, both this year and next.

He said Philips' strategy for next year was to keep innovating and working through the relationship it has with its customers.

"Business is more challenging every year," said Eggebeen. "Philips is 115 years old, and the company has changed itself every year. The world and competition are changing every year, and if you don't change, you will die."

Thai Samsung Electronics product marketing manager Suphot Leenanurak said his company had seen potential for growth in some areas of new technology, such as LCD television sets, for which prices have dropped dramatically.

"We think differently from our competitors. We think Thailand has great potential for consumer electronics if we can supply a variety of products to meet the different demands of customers. We have to develop our dealers and retail stores, in both product displays and how to give product advice to customers," Suphot said.

Samsung has divided its consumer-electronics products into five major segments serving different customers. These include premium, technology-oriented, lifestyle and standard products, he said.

Kwanchai Rungfapaisarn,

Nitida Asawanipont

The Nation