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Published on March 29, 2008

Small appliances have suffered from lower-than-expected first-quarter sales following financial institutions' stricter lending requirements that diminished the number of persons qualified for instalment credit.

PowerBuy yesterday said its first-quarter sales grew only 5 per cent, down from a target of 8 per cent, due mainly to a drop in mobile-phone sales. The devices account for 15 per cent of company sales, and about 30 per cent of them are purchased with instalment credit. PowerBuy witnessed a 10-per-cent drop in mobile-phone sales.

President Suthisarn Chirathivat said many financial firms providing instalment services to buyers of small electrical appliances had suffered from a high level of bad debt, because they failed to collect money from many buyers purchasing products through the instalment system.

"A mobile phone is product that can change hands quite easily," said Suthisarn. "And many buyers who have financial problems will turn in their mobiles for cash. This results in a high level of bad debt, due to a failure to collect money from instalment buyers."

Major finance companies have turned stricter and started freezing credit granted to buyers purchasing small appliances that can change hands easily, such as mobile phones and digital cameras.

Power Mall general manager Pingjai Thitichankul said the problem first emerged last year but had intensified, particularly among university students and low-income earners.

"Because they're short of money, they tap loans for the purchases," she said. "Once they get the devices, they resell them and flee. Mostly, they're easy-to-change-hands items like mobile phones and digital cameras."

Pingjai said Aeon Thana Sinsap (Thailand) had virtually stopped providing credit for mobile-phone purchases.

Power Mall said that while instalment purchases accounted for 12-13 per cent of its sale volume last year, this year the ratio would be 10 per cent, due to the stricter lending rules.

But Suthisarn said PowerBuy expected growth of 8-10 per cent to Bt12 billion in total sales, on the back of the government's economic-stimulus package.

Kwanchai Rungfapaisarn

The Nation