RUSSIA THE MARKET OF CONSUMER ELECTRONICS

MARKET DYNAMICS % % % % % % % % % % forecast

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)

MARKET STRUCTURE, 2008, %

THE LARGEST RETAIL CHAINS

# of Stores Net Retail Sales (USD bl) # of Stores Net Retail Sales (USD bl) # of Stores ELDORADO11006,010005,0770 M. VIDEO122?1572,7171 TEKHNOSILA2011,52421,9198 MIR650,7750,7756 DOMO1990,72560,78240 MEDIAMARKT17

HISTORY, PHASE 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 Foundation of Association RATEK (2000) In 2005 RATEK launched the “DIRECT IMPORT” project Direct Import fully supported by authorities Decrease of customs duties ( %) INDEX OF LEGALITY OF IMPORT 35 %

HISTORY, PHASE 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 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 equality effective control of goods circulation and finance no tax and customs risk

INDEX OF LEGALITY OF IMPORT Mobile phones 9,7478, Notebooks 23,245, LCD-TV 29,190, PDP-TV 39,650, Photo/video cameras 12,88, Fridges 93,898, Washing machines 89,192,499,7100

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 – SDA CANDY – 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 ONISHCHUK PRESIDENT OF RATEK ASSICIATION, Russia, Moscow