Fast Market Research recommends "Venezuela Consumer Electronics Report Q1 2014" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 01/01/2014 -- In a series of actions which are likely to put wary investors even more on edge, the Venezuelan government demonstrated it has no intention of changing course or addressing the serious economic challenges that the country faces. We believe near-recessionary conditions will persist over coming quarters and recent changes announced in Venezuela's management of its currency are not significant enough to reverse the overarching trend towards an official devaluation, which we expect to occur in H114. The devaluation will constrain consumer purchasing power and raise the cost of imported products for local consumers.The ascension to full membership in the Mercosur trading bloc by Venezuela in July 2012 is one of the few bright spots for local and foreign companies operating in the country. This potentially opens up new opportunities in markets such as Brazil, Argentina and Uruguay, which Venezuelan companies can export consumer electronics products to, in order to boost growth. This is evident in the business strategies of Samsung, with its joint venture with the government, as well as VIT and Vtelca. Further, BMI expects an expanding population, rising disposable income and easier access to consumer credit to have positive effects on Venezuela's consumer electronics sales over the long term.
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Headline Expenditure Projections
- Computer hardware sales: US$1.32bn in 2012 to US$1.12bn in 2013, -5.2% in US dollar terms. Forecast downgraded last quarter in the wake of the devaluation of the bolivar.
- AV sales: US$1.10bn in 2012 to US$1.09bn in 2013, -1.1% in US dollar terms. Forecast in US dollar terms downgraded, but Venezuela's digital migration should drive demand for flatscreen TV sets.
- Handset Sales: US$1.41bn in 2012 to US$1.38bn in 2013, -2% in US dollar terms. Forecast in US dollar terms downgraded, but strength of local manufacturing in handsets and operator subsidies will help to absorb some of the impact of devaluation.
Key Trends & Developments
Samsung has signed an agreement with the Venezuelan government to establish a factory in the country to produce appliances, TV sets and mobile phones. The agreement is an extension to the joint venture and strategic alliance signed between the two during December 2012 and will include the capacity to export the manufactured goods. BMI sees a number of advantages for the electronics company in Venezuela, but cautions the risky business environment will be difficult to navigate over the into 2014. The joint venture is 51% owned by the Venezuelan state and 49% by the Samsung company, and was designed to produce goods for the domestic market and export to the South America. The Venezuelan Minister for Industries, Ricardo Menendez, indentified appliances such as washers, dryers and refrigerators will be manufactured alongside TV sets, monitors, mobile phones and tablets.
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