IDF pumps 500 million rubles into Haier: China gets free money for pursuit race
Haier Fridge Rus can surpass POZIS in the market of refrigerators due to state support
The lucky Haier has again been given federal preferences by the third anniversary of work in Naberezhnye Chelny PSEDA (Priority Social and Economic Development Area). The Industrial Development Fund has allocated a fantastic loan to the Chinese resident in the amount of 500 million rubles at 1% per annum, which gives it the unique chance to enter the five largest producers of the ''white equipment'' in the country. Due to state support, Haier is to reach the level of assembly of 500,000 refrigerators a year by 2023 (with the capacity of the Russian market of 3 million units), and if the Chinese manufacturer remains in the mass segment, its collision with POZIS (part of Rostec) is inevitable. Read the details in the material of Realnoe Vremya.
IDF gives half the money to China
On 16 January, the federal Industrial Development Fund (IDF) issued a rather sensational report on the results of consideration of applications for preferential loans. The expert council of the IDF approved ten projects in several industrialized regions of the country (Moscow Oblast, Nizhny Novgorod Oblast, Tula Oblast, Ulyanovsk Oblast, Sverdlovsk Oblast and Ryazan Oblast, as well as Tatarstan), which received state support for a total of 1,06 billion rubles. The most interesting thing in this information is that half of the allocated money the IDF gave to support the assembling of the Chinese manufacturer Haier, launched in Naberezhnye Chelny PSEDA. As follows from the message, the expert council of the IDF approved the application of Haier Fridge Rus to increase the volume of assembly of refrigerators from 250 to 500 thousand pieces a year, allocating a loan of 500 million rubles at only 1% per annum.
''The loan has been issued under the terms of the programme 'Components','' deputy head of the external communications department at IDF Andrey Raym explained to Realnoe Vremya. ''The interest rate in the first 3 years will be 1%, and 5% — for the remaining period. The repayment period – Q4 2023.''
The financial department of Haier Fridge Rus added to this that the agreement on obtaining the preferential loan has already been signed and the first tranche is to be disbursed in the near future. ''Usually such loans are issued for 5 years, but our project has a short payback period. For this reason, the loan is taken only for 4 years, that is, the rate of one percent will be valid for the entire period of borrowing,'' the representative of the company said.
Eldar Timergaliev, the deputy head of the Executive Committee of Naberezhnye Chelny on the development of PSEDA, noted that the Chinese company has become the second recipient of the IDF loan among the residents of the PSEDA, which indicates a high priority of its projects.
Haier reaches the design level: 220k produced
As it is known, the Chinese manufacturer of the ''white equipment'' Haier is the anchor resident of Naberezhnye Chelny PSEDA, where it has significant tax preferences. As already Realnoe Vremya reported, in April 2016 the company opened in Naberezhnye Chelny Russia's first plant for the production of 250,000 refrigerators a year, first becoming a resident of the Kama industrial park Master, and after receiving the status of the city of PSEDA signing an agreement on entering it as a resident. The volume of investments, according to the IDF, then amounted to $55 million. ''The volume of investments, of course, is small,'' recognized then the head of the Investment Development Agency, Talia Minullina. ''But it is important for us, of course, not $55 million, but the fact that they will bring their suppliers and partners here.''
According to the company, it has produced more than 400,000 refrigerators over 3 years since the launch of the plant. Only in 2018, Haier approached the design level, producing about 220,000 units of refrigeration equipment. For comparison, the Tatarstan manufacturer POZIS produced about 1,500 units of refrigerators daily, deputy director general of the company for strategic marketing Bulat Khasanov told Realnoe Vremya last May. Thus, POZIS continues to hold a psychologically important milestone of 400,000 units a year for several years.
The funny thing is that the Chinese and Tatarstan manufacturers ''sit'' in the same price category — the most mass segment of the economy class. Therefore, it is not surprising that the advent of Haier plant caused an acute and painful reaction of the Zelenodolsk company. Its CEO Radik Khasanov with resentment stressed in the media that the Chinese manufacturer would take advantage of tax preferences, but the Tatarstan company would still have to pay the Treasury in full, which puts the companies in unequal economic conditions. Indeed, after granting the status of PSEDA to Naberezhnye Chelny in January 2016, Haier Corporation received a bunch of tax benefits: instead of the standard rate of 20% for income tax, the company pays 5% in the first year, land and property taxes are zero, and insurance contributions to social funds are reduced three times. A separate presidential gift was the ultra-low rent for production facilities.
Moscow will cover two-thirds of the cost of the second branch of Haier
The fantastic in terms of conditions federal loan gives the Chinese a great chance to surpass domestic producers. As Haier Fridge Rus told, the money will go to the purchase of equipment for the second branch for the production of refrigerators. At a total cost of 750 million rubles, the Moscow money will cover them, respectively, by two-thirds. Due to the loan, the resident of the PSEDA is preparing to double production by 2023 and to rise to the level of 500,000 refrigerators a year, the company explained. However, the Chinese were telling about doubling production from the first days of the launch of the refrigeration production, relying on their own resources. But here the opportunity appeared. ''If we did not have such an opportunity, we would have to take a loan at 12% per annum,'' the company said. The leadership of Haier Fridge Rus is also quite satisfied that the application was considered in a short time. ''It took only 3 months,'' said the representative of the company.
We were not specified in what price category Haier intends to produce refrigerators of the second line. But, judging by the comments of representatives of the company, they are not planning to change the range radically. The Chinese are likely to remain in the economy class segment and a little higher, which means that a new intersection of interests with POZIS is inevitable.
We didn't manage to contact Radik Hasanov on 16 January — his mobile didn't answer.
Neither Indesit nor Samsung nor Bosch used financial doping
Thus, the Russian market can be flooded with a serious mass of Chinese refrigerators — its capacity, according to the Association of Trading Companies and Manufacturers of Household Electrical Equipment and Computers (RATEK), is estimated at 3 million pieces. The Chinese invasion can hit primarily local producers.
''If the ambitious plans of the Chinese manufacturer are implemented, then, of course, there will be a tougher competition,'' said the representative of RATEK, Anton Guskov. Now the top three includes the alliance Whirlpool and Indesit, Korean Samsung and LG and German Bosh. In fact, they control the entire market, and its leader sells about 1 million pieces a year. According to market participants, so far none of them has been able to get such a powerful financial doping. ''They were built in Russia at the expense of Western investments and own funds, and if there was state support, then local, at the local level. For example, as zeroing the payment for connection to networks,'' they noted in RATEK. ''But here it is important to consider whether they (Haier – editor's note) will be able to sell all refrigerators produced in Russia or they will be exported? We need to look at what kind of marketing policy they will conduct.''
Will Rostec surpass the Chinese?
However, the owner of POZIS is also not going to stand still. Last August, Rostec announced plans to invest 2 billion rubles in the modernization of the plant in order to reach the level of 600,000 refrigerators a year by 2021. ''Rostec GC is implementing an investment project at POZIS, which is part of Tekhmash group, for technical re-equipment and increasing the production of domestic refrigeration in two times — to 600,000 units a year. The total investment volume in the production of household and medical refrigeration equipment will be about 2 billion rubles by 2021. The project provides for technical re-equipment of the enterprise and construction of a modern warehouse for storage of finished refrigeration products. New production and storage facilities will allow the company to increase revenue from sales of civilian products to 17,5 billion rubles by 2025,'' the state corporation said at the time. However, how things are going in practice is still unknown.