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Electronics Production | May 26, 2009

Lower import duties and rising customer demand to boost Russian EMS-Market

Russia has been looked upon as an unfavourable market for electronics manufacturing by foreign electronics manufacturers in the past. This negative perception has been in spite of the country's cost-competitive advantages as well as its growing domestic market.
However, liberalisation coupled with heightened demand from key end-user segments such as consumer electronics is aiding the growth of the electronics manufacturing market in Russia. New analysis from Frost & Sullivan Russian Electronics Manufacturing Markets finds that the market earned revenues of $1.85 billion in 2008 and estimates this to reach $4.91 billion in 2015.

"The lowering of import duties on liquid crystal display (LCD) components will positively impact market prospects," notes Frost & Sullivan Research Analyst Harish Natesan. "The increasing demand for flat panel display (FPD) products will be another key factor influencing the growth of the Russian electronics manufacturing market."

The demand for FPD products such as televisions and monitors has been rising rapidly over the past few years, especially due to the downward price trends of these products. The Russian government's initiative to encourage LCD manufacturing has resulted in the lowering of import duties on components used in LCD products. Such moves are expected to attract many key LCD manufacturers as well as their electronic manufacturing services (EMS) partners to Russia.

However, the global economic slowdown is a key factor restraining the entry of foreign investors into Russia. Many multinational OEMs as well as EMS companies have postponed or shelved plans to enter Russia amidst the current economic crisis. "The global economic slowdown will continue to have an impact on foreign investments in electronics manufacturing," cautions Harish Natesan. "Many multinational companies have deferred plans of a proposed entry amidst the recessionary scenario."

Despite the current gloom, the market remains optimistic. In the last few years, foreign manufacturers have increasingly penetrated Russia due to the liberal economic and fiscal policies introduced by the government as well as the increasing demand in major segments such as automotive and consumer electronics.

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