Vestel Elektronik Sanayi Ve Ticaret
25 July 2000
Following the publication on 17 July 2000 of a 'Notice of Initiation of
anti-dumping proceeding concerning colour television receivers originating in or
exported from Turkey', here is Vestel's notes on the current situation:
1. The investigation is expected to be concluded within 15 months from the
publication of the 'Notice of Initiation' in the Official Journal of the
European Communities. Currently, the production of 18,000-20,000 CTV sets per
day still continues and Vestel has not been keeping up with its production,
logistics, purchasing, and sales activities.
2. The Company has no liquidity problems. It still holds its stong position in
the eyes of the financial institutions due to the following reasons:
a) the Turkish financial system believes that the likelihood of an
anti-dumping sanction is low, and,
b) Vestel has a sound balance sheet.
3. The allegation of dumping on Turkish manufacturers is based on a comparison
of normal value, establsihed on the basis of domestic prices, with export
prices. On this basis, the dumping margin calculated is claimed to be
significant, and that exports are being subsidised with domestic sales. Vestel
believes that there are strong arguments against the issues that will arise
during the anti-dumping investigation.
a) Vestel will be selling c.500,000 CTVs in the domestic market, and in the
export market the number of CTV sales is c.5,000,000 in 2000. Based on this
breakdown, it much unlikely both from economic and arithmetical perspective to
subsidise lower margins in the export markets.
b) Domestic price of a CTV is composed of interest charges of 20-25% due to
sales on instalment basis which is representing 80% of total sales, 25% of VAT,
expesnes related to having a distribution network of approxiamately 2500
dealers, charge is due to the after sale services provided and 3 years of
guarantee offered to the customers, advertising and marketing & distribution
expenses, and revenue stamp (banderol) charge of 10% by Turkish Radio and
Television (TRT). Vestel has been investing in its brand heavily to sustain its
increasing market share, which makes up a significant portion of the domestic
Vestel believes that had there been a profitability in the domestic market as
acclaimed by the compliant, the European manufacturers could have moved in to
the Turkish market to take advantage of Customs Union agreed back in 1996.
c) Turkey has become a member of Customs Union in 1996 and is a strong
candidate for European Community. Any provisional or permanent sanction would
harm the existing relations between Turkey and its European counterparts.
d) Turkey is a net importer of electronic goods with a $2 billion trade
deficit ($1 billion export vs. $3 import). Currently, the state authorities are
closely following the anti-dumping allegation at ministry level and they are
providing full political support.
As the next step, Vestel has already appointed Van Beal Bellis, a Brussels law
firm, as its legal adviser for the investigation Van Beal Bellis had also
advised the Company during an anti-dumping allegation filed in 1994 against the
local Turkish manufacturers and no measures were imposed then.
Vestel will be informing its investors as appropriate during this investigation.
To this end, Vestel plans to make weekly announcements as deemed necessary and
arrange a meeting next month in London to keep on updating the investors.