Consumer Electronics Industry Impact on Bangladesh Economy

In the past couple of decades, domestic consumer electronics and home appliance brands have played a massive role in improving the quality of life for Bangladeshi people. Back in the day, this sector was primarily import-oriented, but over time, these local electronic brands are becoming fully self-sufficient. Since these local brands manufacture their products in their own factories, they are able to offer competitive prices over international brands.  Because of this, people from different cities and remote areas of the country have benefited as it makes these products a lot more affordable to them. Aside from that, these local brands are creating substantial employment opportunities with significant contributions to the nation’s economy.

Overview

In the 1950s, the electronic consumer appliance journey started with assembling the radio set. Then in the next decade, those assembling plants started to assemble television sets along with radios. Although the electronic appliance sector was almost predominantly import oriented until the early 1980s, later, several assembly plants were established in Bangladesh to manufacture small electronic appliances like radio, television, and audio-video cassette players. Walton and MyOne started their operations in the 1990s as the first commercial consumer electronic makers. According to The Financial Express, at that time, these domestic companies was looking for a way to add value to their products, so they started importing small parts and assembling all kinds of electronic devices. But later, the electronics appliance market in Bangladesh began to grow and gradually, those companies shifted from assembling to manufacturing most of the parts. However, they still had to import a few technical components because it was not yet possible to locally manufacture them.

In 2007, Walton Hi-Tech Industries PLC started manufacturing electronics like refrigerators, freezers, and air conditioners in their manufacturing plant.  Walton started to competitively price their electronics and home appliance products, and as the cost was low compared to global brands, this grew more interest in consumers to purchase products from Bangladeshi companies. The success of Walton has inspired other local brands to manufacture several different types of home appliances at a small scale. These local brands also started to implement competitive prices over international products because of lower labor costs and government incentives. And because of this, several international brands started to venture with local companies to manufacture and sell their products in Bangladesh. 

The consumer electronics sector in Bangladesh can be categorized into three parts: large appliances, electronic appliances, and small appliances. Large appliances like refrigerators, washing machines, air conditioners, and televisions are now entirely manufactured by Bangladeshi companies.  Moreover, after filling up the needs of the local consumers, they are also exporting their products abroad as well. Since 2010, local consumer electronics giant, Walton, has started exporting their products abroad and they are exporting their products to 40 countries, which includes the Middle East, Africa, and Europe. To follow, other local brands have also started to export their own electronic and small appliances abroad. By looking at the import-export report of Bangladesh’s electronics industry from the past few years, it can be seen that there was a decrease in the total exports due to the outbreak of Covid-19 in the financial year 2019-20. However, in the financial year 2020-21, the export amount for electronic products was BDT 600 crore , and in the financial year 2021-22, it increased to more than BDT 900 crore. On the other hand, in the financial year 2020-21, the import cost of electronic products was BDT 36 crore which increased to BDT 40 crore by May of the financial year 2021-22. As a result, it can be concluded that Bangladesh can produce almost all of its necessary electronic products independently and also export them abroad.

Economic Impact

Reduction of Import Dependency

A country needs to be self-sufficient in almost every sector including food, clothing, and electronics. It reduces the country’s dependence on another country and improves its development. Bangladesh has achieved self-sufficiency in food production ages ago. Moreover, Bangladesh holds 2nd place in the global RMG exporting sector. Also, the export of electronic products from Bangladesh are much higher than its imports. It is a significant achievement for Bangladesh on its journey to becoming self-sufficient, including several categories in the consumer electronics sector. The main game changer behind this achievement is the local consumer electronics and home appliances manufacturing brands like Walton, MyOne, and Vision. A large variety of electronic products are being manufactured and sold by these brands since the last couple of decades. Because of this reason, the import of electronics products in Bangladesh has decreased significantly.

Improving Living Standard

Local brands are offering their products at a very affordable price because they manufacture these products in their own facility, which plays a vital role in improving the quality of life of the people of the country, especially the rural people. Because of their high price, these electronic products are once out of the purchasing ability of the general public. However, in the past couple of decades, all kinds of electronic products and home appliances have become more affordable and within reach of the average household thanks to the contribution of local electronic consumer brands. Currently, local brands have showrooms in almost every District and Upazila of Bangladesh, where rural customers can purchase electronics at an affordable price.  The suffering of the people have also been greatly reduced since these local brands have after-sales service centers in almost every district of the country. Consequently, electronic appliances have become a basic need for people, especially televisions and refrigerators. In fact, fridges are also found in small tea shops in rural areas where products like soft drinks, juice, ice cream, milk, and yogurt can be stored.

Job Creation & Foreign investment

Aside from improving the living standards of the people of Bangladesh, these local Bangladeshi brands have created employment for many people, thus, helping to reduce unemployment and increasing the overall skilled labor force in order to manufacture technological products. On the other hand, these domestic brands engage their dealers, marketers, and sellers, creating employment for many other groups of people. Rural businessmen also use refrigerators in their small and medium-sized shops, and small hotels and restaurants use blenders, mixers, and microwave ovens. Because of this reason, small business owners are also being benefited from this. And for this, global brands like Samsung and LG are now collaborating with the local Bangladeshi brands in a massive venture, which has increased direct foreign investment and has also created more employment opportunities.

Export

For a long time, Bangladesh has been exporting products like RMG, leather, footwear, and pharmaceuticals to foreign countries. Currently, consumer electronics have been also added to the list of these exported products. Local brands in the country are now expanding their business by exporting to countries like India, Nepal, Bhutan, the Middle East, America, and several European countries. As a result, in the financial year of May 2021-22, Bangladesh’s total electronics export income stood at around BDT 900 crore.

It is expected that these exports will increase in the future, and this sector will become a significant source of export earnings for the country. Therefore, Bangladesh’s electronics industry will contribute greatly to the country’s foreign exchange earnings.

In addition to the development of every big industry, some small sectors are also experiencing significant growth. As a result of backward linkages, small industries like machinery, logistics, textiles, spinning, chemicals, fabric, etc., have grown as well. Because of this, it can be expected that, with the continued growth of the country’s consumer electronics industry, several new sectors will see rapid growth due to backward links in the future, which will impact the country’s economy positively.