RUSSIA

THE MARKET OF CONSUMER ELECTRONICS

MARKET DYNAMICS 2000 + 35% 2001 + 30% 2002 + 30% 2003 + 30% 2004 + 30% 2005 + 25% 2006 + 15% 2007 + 15% 2008 + 12 %

2009 - 25 % forecast

-30

-20

-10

0

10

20

30

40

2001 2002 2003 2004 2005 2006 2007 2008 2009

MARKET DYNAMICS

2004 – USD 8,5 bl 2005 – USD 10,5 bl 2006 – USD 12,5 bl 2007 – USD 14,4 bl 2008 – USD 16,5 bl 2009 – USD 12,4 bl

(forecast)

2004 2005 2006 2007 2008 2009

MARKET STRUCTURE, 2008, %

33

28

15

15

7 2

IT/OETELECOMCEMDASDAPHOTO

THE LARGEST RETAIL CHAINS

70

30

CHAINS

OTHERS

THE LARGEST RETAIL CHAINS

2007 2008 2009

# of Stores

Net Retail Sales

(USD bl)

# of Stores

Net Retail Sales

(USD bl)

# of Stores

ELDORADO 1100 6,0 1000 5,0 770

M. VIDEO 122 ? 157 2,7 171

TEKHNOSILA 201 1,5 242 1,9 198

MIR 65 0,7 75 0,77 56

DOMO 199 0,7 256 0,78 240

MEDIAMARKT 17

HISTORY, PHASE 1

1990 - 2000 high customs duties (25 % - 30 %),

high VAT (23%). no direct contracts between international

manufacturers and Russian dealers

INDEX OF LEGALITY OF IMPORT 5 %

HISTORY, PHASE 2

2000 - 2005 Foundation of Association RATEK (2000) In 2005 RATEK launched the “DIRECT

IMPORT” project Direct Import fully supported by authorities Decrease of customs duties (10 -15 %)

INDEX OF LEGALITY OF IMPORT 35 %

HISTORY, PHASE 3

2005 - 2006 expansion of retail chains direct import-contracts legal import increasing growth of a tax transparency of retailers decrease of offshore import

INDEX OF LEGALITY OF IMPORT 60 %

HISTORY, PHASE 4

2007

DIRECT IMPORT

SAMSUNG, SONY, NOKIA, PANASONIC, LG, Group SEB, TOSHIBA, CANON, PHILIPS, SHARP, PIONEER, SonyEricsson, WHIRLPOOL, JVC

INDEX OF LEGALITY OF IMPORT 80 %

LEGAL IMPORT

LEGAL IMPORT IS:

competitive equalityeffective control of goods circulation and financeno tax and customs risk

INDEX OF LEGALITY OF IMPORT

2004 2005 2006 2007

1. Mobile phones 9,74 78,4 100 90

2. Notebooks 23,2 45,5 48 50

3. LCD-TV 29,1 90,2 70 70

4. PDP-TV 39,6 50,5 94 100

5. Photo/video cameras 12,8 8,5 21 95

6. Fridges 93,8 98,5 81 100

7. Washing machines 89,1 92,4 99,7 100

HISTORY, PHASE 5

Localization of manufacture in Russia

Large international manufacturers have opened factories in Russia

INDEX OF LEGALITY OF IMPORT 95 %

HISTORY, PHASE 5

Localization of manufacture in Russia

Samsung – LCD-TV, LED-TV

LG – MDA, TV

MERLONI – MDA

BEKO – MDA

VESTEL – MDA, LCD-TV (forecast)

BSH – MDA

DeLonghi – SDACANDY – washing machines

HISTORY, PHASE 5

Localization of manufacture in Russia

FOXCONN, JABIL

CRISIS

QII 08 vs. QII 09, % Net Retail Sales: - 43,1% OE: - 66,7% TELECOM:  - 47,2% A/V: - 44% IT: - 39,6% PHOTO: - 38,8% SDA: -36,9% MDA: - 28,8%

C.News, GfK

OUR SUCCESS

LEGALIZATION (90 %) LOCALIZATION (MDA – 80 %, TV – 70 %) LEGAL DIRECT IMPORT PROTECTION OF CONSUMERS MODERN MARKET STRUCTURE ASSOCIATION RATEK

RATEK ASSOCIATION

Association RATEK was founded in 2000 membership is more than 60 members,

including federal retail chains, major wholesale companies, manufacturers of electronics (INTEL,

Samsung, Vestel, Motorola, Sony, Olympus, Microsoft, Hewlett Packard, Foxconn),

service companies

RATEK ASSOCIATION

GOALS: protection of collective interests of the members of

the Association by way of representation of their interests in international non-governmental organizations, Russian governmental bodies and other organizations;

contribution to the creation of equal competitive and favorable financial and economic conditions for faithful members of the market of electric household and computer goods;

RATEK ASSOCIATION

MAIN PROJECTS Tariff regulation Radio frequencies reform Legalization of import Copyright levy Protection of consumers’ rights Service Power effectiveness Sanitary and technical rules and norms

THANK YOU FOR ATTENTION

ALEKSANDER ONISHCHUKPRESIDENT OF RATEK ASSICIATION,Russia, Moscowwww.ratek.org,central@ratek.org007 985 769 2049