The UAE’s consumer electronics market is one of the largest in the Gulf and according to some estimates accounts for 40 per cent of regional spending. Owing to its unique geographical location, UAE’s consumer electronics market serves almost two billion people across Asia and the Middle East.
Rapid economic recovery, the rise in population, expatriate wealth, strong household consumption, varying modern retailing concepts, inflow of tourists and large number of passengers in transit, continue to provide excellent conditions for the consumer electronics market to develop in the UAE.
According to the Business Monitor International (BMI), the UAE’s consumer electronics devices market, defined as a market for computing devices, audio, video, mobile handsets and gaming products, is projected to grow by 26% from the estimated sale value of $ 3.4 billion in 2011 to $ 4.3 billion by 2015.
Over the last few years, consumer electronics have seen phenomenal growth in UAE. The demand for personal computers, LCD TV sets, digital cameras and smartphones have seen remarkable growth. The result has been a boon for consumer electronics manufacturers as well as renewed growth for the industry. The consequent boom has also created several challenges to the retailers.
Counterfeiting and the presence of parallel markets are some of the daunting challenges to the consumer electronics market in the UAE. Due to Freezones and relaxed re-export regulations, many electronic products find their way into the domestic market and the authorized agents and dealers have no control over illegal channels of fake products. There is a very clear Commercial Agencies Law (Article 23 of Law No 18) that prohibits all counterfeit products in UAE; despite this, these products continue to flourish throughout the country.
A low profit margin due to the tough competition is another leading issue in the UAE’s consumer electronics market. In an endeavor to capture a greater market share, the consumer electronics retailers in UAE are virtually in a state of war. Each retailer is offering special discounts and promotions. The height of such promotions can be seen during the shopping festivals and Eid days. Undoubtedly, shopping festivals and discounts increase the sales revenue for retailers, but that is not necessarily reflected in profit margins as they tend to dwindle in tough competition.
The UAE’s local consumer electronics industry is still in its infancy and is currently going through a developmental process. Compared to international giant computers manufacturers, local computer manufacturers and assemblers are much weaker and lack basic capital and human resources. To protect the local manufacturers and give a boost to the re-assembling business, the UAE government needs to re-formulate its policies to help the local manufacturer to compete with large global brands.
It is very interesting to note that there is no clear definition or standard classification system that categorizes electronics into demarcated groups of products. A proper definition and fixed standard classification would clarify exactly what consumer electronics stands for and prevent further issues for both customers and retailers in this regard.
It is reported that the UAE government has been seriously considering imposing value added tax (VAT) on some specific goods and services. If VAT is implemented it will result in a squeeze on consumer spending, which is already at the lowest ebb since the outbreak of global financial crisis.
Countries like Saudi Arabia, Qatar, Kuwait and Bahrain are trying to compete to become the Middle East’s major consumer electronics market. In this context, government has to re-formulate its policies so as to attract further investment into this sector.
Geographical locations of the country and low import duties have made the UAE as special trading hub for the consumer electronics market. As some experts believe, the sector has great potential to become the leading market of the world. But that is only possible, when some genuine efforts are made to remove the all bottlenecks from the market.