Page 70 - bne Magazine February 2023

70 I Eurasia bne February 2023
The story is similar in Kazakhstan, but wages, both nominal and in dollar terms, have been rising for decades on the back of the booming oil business and are much higher than in Uzbekistan.
The per capita income in PPP terms (purchase power parity) in Kazakhstan was $24,970 in 2021, the second highest in the Commonwealth of Independent States (CIS) after Russia ($32,000), and way ahead of Uzbekistan ($8,520).
Of course, the Kazakh oil money is not evenly distributed amongst the population, where there is significant income inequality; nevertheless,
the Kazakh consumer market is significantly richer than Uzbekistan’s.
Wages in dollar terms have also been climbing steadily from KZT12,890 ($172) per month in February of 2000 and have averaged KZT101,375 over the last two decades, rising to an all-time high this September of KZT322,900 ($696) per month, according to Trading Economics. That compares with Russia, where salaries decreased to RUB59,907 ($974) per month in August, down from an all-time high of over $1,000 a month shortly after the war in Ukraine started.
In Uzbekistan, the average salary in September was UZS1,716,330 ($153), although there are substantial differences between the various wage surveys, and the different classes of
job command large differences in pay. Much depends on a worker’s profession and in which city they live.
White goods a burgeoning business
The growing wealth of the residents
of the Former Soviet Union (FSU) and now Central Asia has drawn in most of the international household names, but it has also fuelled the growth of the Soviet-era manufacturers that have modernised and compete on the same market, albeit mostly in lower price brackets.
White goods manufacturing is already well established in the CIS, with most of the factories exporting across the whole region, including Central Asia.
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Long ignored by the international manufacturers, Uzbekistan’s leading maker of white goods Artel has had the market largely to itself and built up a business that dominates the region. It is now expanding into other markets
as it can price its goods below those of the international names, but increasing can offer products comparable to the international brands. And in July,
Artel signed off on a deal to supply M.Video, Russia’s leading consumer electronics retailer, with goods, as many international names suddenly disappeared from the Russian market.
As the biggest consumer market of
all, most of the international brands traditionally set up production in Russia, which has 18 major factories, of which five are Western household names (Ariston, Bosch, Indesit, LG and Samsung).
These factories make everything
from Samsung TV sets, through LG’s refrigerators, Indesit’s microwave ovens, to Ariston’s boilers. More changes are
in the works as international brands continue their exit from Russia, and according to reports, LG is amongst those looking at Central Asia as a destination if they relocate to a different FSU country.
The factories’ production is exported regionwide, but the bulk of the sales are targeting Russia, where the population enjoyed the highest per capita incomes in the CIS.
Market growth 2020-2022
The leading Russian producers have
a narrower product range, typically concentrating on fridges, washing machines and ovens. Outside Russia there are more factories in Belarus
(4), Ukraine (3), Kyrgyzstan (1) and Turkmenistan (1), which are all exclusively Eastern European brands, except for an Electrolux factory in Kyiv that makes washing machines.
Belarus has the longest history of consumer electronics production, as
it was the leading producer during the Soviet era; the “Minsk fridge” is still well- known across the CIS with a competitive offer of low price but decent quality.
In the last three years these producers have modernised, and new companies have entered the market. Belarus’ Atlant is the biggest, producing 1.2mn pieces
a year, including refrigerators, freezers and washing machines. Gefest is another leading brand, making 900,000 pieces a year but focusing on ovens and cookers.
Ukraine has the second-largest population in the CIS of some 42mn people, although it will soon be overtaken by Uzbekistan, as Ukraine’s demographics are collapsing while Uzbekistan’s are swelling. Apart from the Electrolux factory in the capital, Ukraine is also home to Greta that makes gas ovens and DonFrost that makes fridges and air conditioners
– although production has been suspended thanks to the war.