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LEDs in India cost twice of what they wud in US..Why ?

Luxman Amplifiers India

shaileshmor

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I am interested in buying 55 inch LEDs and have seen demos of Samsung n Sony. However the price range is just not understandable. Just checked the prices of the same models selling here in USA and they are exactly half or even less than half of what they are trying to retail here.

Can we understand how Samsung or LG or any of the brands will retail the TV in India for double the price when both of them have manufacturing sites here n can easily assemble rather than import n add duty costs to consumers ! I am sure if they scale the price down to around a Lac or above...they would be able to sell 3 times the qty they are able to sell now n hence easily invest in production line setups for future.

I just fail to understand how these companies decide to lump Indian customers with double the prices whereas the most richest economy n consumers in the world(US) would get just half of that price !

I understand economy of scale but scale will only happen if you allow it to happen in India.
 

BLASTO

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I am interested in buying 55 inch LEDs and have seen demos of Samsung n Sony. However the price range is just not understandable. Just checked the prices of the same models selling here in USA and they are exactly half or even less than half of what they are trying to retail here.

Can we understand how Samsung or LG or any of the brands will retail the TV in India for double the price when both of them have manufacturing sites here n can easily assemble rather than import n add duty costs to consumers ! I am sure if they scale the price down to around a Lac or above...they would be able to sell 3 times the qty they are able to sell now n hence easily invest in production line setups for future.

I just fail to understand how these companies decide to lump Indian customers with double the prices whereas the most richest economy n consumers in the world(US) would get just half of that price !

I understand economy of scale but scale will only happen if you allow it to happen in India.

For one last time, stop comparing US costs with indian costs. Some reasons are 1) Huge number of items sold, 2) Lesser taxation 3) More involvement of US in R&D etc..

Compare the UK prices with indian prices. That is a good measure. Even then it will be a little bit on the higher side in india. That is what we have to be worried about.
 

shaileshmor

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I already addressed your volume assumption...its directly related to price...consumer segments in india in that bandwidth may be smaller than US but not that small to demand more than 100 pct difference. Volumes are directly proportional to price !

Secondly I hope you know where Samsungs n LG TVs are manufactured and where does US import it from ? China ! Cost of importing for India in terms of frt is much cheaper than its for US to import fm China ! Its actually half of what US pays to import.

Duties n taxes are the only differential and again if you are importing components for manufacturing as LG/Samsung both have manufacturing base in this mkt then those differentials would not be that high ! Trust me if yu calculate duty levied on fully finished product in US v/s components here in India...you'll be surprised to see the cost of landed product is cheaper in India !

This comparison against UK prices is a myth which we should all do away with coz we simply allow such prices to exist by macro assumptions rather than see the devil in details !

Have you ever wondered why the same LCDs launched 2 yrs ago cost the same in US v/s India ? What changes in 2 years ?

If you figure out the supply chain n opportunities manufacturers have...there is no reason why Samsung should not launch products at similar prices if not same here vs US !

Also figure out how much margins dealers have on these launches...I hv an offer of 75,000 below MRP listed for Samsung 55 inch n they still say its negotiable !!

So I am afraid its not as simple as "Do not compare against US..Just benchmark UK" my friend. Its not the last time for sure we shud raise such issues...As consumers we should get more educated or atleast be more curious to find details rather than just go by old fashioned thumb rules !
 

hemantwaghe

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I know the dealers might be getting a steep margin. I was hunting for a 37" and the dealer was ready to sell it @ 15000 less than the MRP.

You may follow the discussion here on prices...although mine is more generalized for LCD/Plasma.

http://www.hifivision.com/television/7384-why-lcd-plamas-so-costly.html

For one last time stop talking about MRP in electronics in IT MRP is some number @ which almost noone buys.
When buying any IT part or gadget see what MRP sticker is pasted ...sometimes it is as high as 3 imes.....!Again anyone compared @ what price croma sells HDD s and it's open market prices....in open market you get almost 500-1500 Rs lower!!

Insiders use a term called MOP-Market operating price - the price at which market operates...
 

sachin_k5

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shailesmor,

Every product has a price elasticity which indicates how much the demand will increase for a particular reduction in price. This is a factor of need of the product and competition etc. Every manufacturer knows this and puts his product at a price which has optimal demand. You will argue that if they reduce the price they will increase demand. They will not since a) there is no competing product significantly below their price b) People buying LED tvs are affluent customers who will not mind paying 20k-30K extra.:D so why not milk the cash cow :D

Regarding demand : It looks high since you have everybody talking about Flat Tv's and forums like these have this product as a hot topic, however the volumes do no exist in non-urban areas. For a manufacturer to setup a plant the volumes require significant numbers. Assembling also attracts lots of duties and taxes. Remember one thing about taxes..if the government sees a product as one going to be used by affluent customers then it will apply a tax. A 1.4 CC car engine attracts a higher tax compared to a 1.2CC engine for this logic. Same with LED tvs.

Other most common argument i have heard is the government should cut duties etc and let people enjoy their life. The government plays a role of Robinhood wherein it takes from the rich and gives it to the poor. So if you can affort a LED tv in a country which has a majority of its people below poverty line...you better pay some duties and taxes. No wonder the term 'duty' is used. 'Duty' towards your fellow country men :D
 
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adder

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the tvs sold in india are still taxed the volumes are very low compared to the US.
LED lcd tvs are still mostly imported directly(atleast from sony),so they attract a huge custom duties of around 35%.
the tvs sold in the US are made in mexio.while the panels are still sourced either in taiwan,s.korea and japan.
 

shaileshmor

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Dec 22, 2009
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Firstly @ hemant n blasto kind of people....Can we stop using this phrase "for one last time" !! Its very offensive n i don't think so anyone gives u the right to be offensive n throw attitude at public platforms ! You are no less than those hi end speaker sellers who make one feel sorry for coming into the showroom if you didn't arrive in a mercedes outside their door !!

Sachin reading in...appreciate your inputs n you are very right in a general sense on price elasticity n optimal demand. However my feel is (n i am sure you can find surveys on this) that Indians have much higher aspiration to own lifestyle upgrades and if retailers realize that they need to play a volume game in India to raise the profile of the market per se then it would be worth the effort. There are already examples of other industries where global prices of products whether premium or ultra premium mkt is the same in India as in US or other developed economies...Take mobile phones for e.g.

You can clearly see the retailers or manufacturers who went for volume strategy by cutting margins have done very well in this mkt. LG/Samsung were among the first companies who set themselves this goal n have done very well on them. This is what confounds me when they don't follow the same dynamics on new high segment launches.

If competition doesn't exist a retailer is entitled to its initial margins as research costs etc are huge n need to be recovered. So there is an absolute # they need to recover pretty fast before they get into a routine volume/margin equation as each of these products hv short life cycles due to new technology chasing it hard. My point is that the absolute # say Inr 100 can be recovered by 5 units selling at Inr 20 per unit margin or 50 units selling at Inr 2 per unit margin. The fair thing wud be a balance somewhere in between.

Indian consumers I am afraid - the so called high end ones always end up getting the raw end of the deal for their aspiration to upgrade themselves to global standards n launches n we end up paying double the dollars that developed countries pay whereas we still earn in Inr. I wish retailers change their policies here(some already hv after learning hard lessons) to build long term loyalty n respect and more than anything play a good business game where they raise the profile of Indian consumers to a high number of lifestyle brand buyers rather than limit it to a snob value limits.

ps : i like your robinhood theory but i am sure you wud agree...govt can earn much more revenue to pass on if the base of turnover was high so if govt earns 30 % n therefore limits the total sales turnover to lets say 100..thereby earning just 30 bucks to spread the cheer whereas it can easily lower the duty to std 10 % n turnover can end up going to 1000 whereby its absolute revenue wud hv raised to 100 bucks thereby earning more than 3 times absolute # n spreading more wealth across the nation.
 
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