The American connection

The Consumer Electronics Association of America is the country’s peak industry body and a powerful lobbyist to the US government. The CEA’s senior VP of events, International CES, Karen Chupka, and VP International, Elizabeth Hyman, talk to ECN about their impressions of the Middle East CE market.

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By  Michael Thorne Published  June 13, 2006

|~|KC200.gif|~|Karen Chupka, CEA senior VP of events, International CES.|~|Electronic Channel News What do each of your roles entail at the Consumer Electronics Association (CEA)? Karen Chupka I have been with the CEA for more than 17 years. My primary role is organising the International Consumer Electronics Show (CES), which is the world’s largest annual trade exhibition. I’ve held a number of key positions with the CEA over the years; everything from marketing to working to expand the membership base and establishing new divisions to deal with emerging technologies. Elizabeth Hyman I’m currently employed by the CEA’s international business department, which commenced operations in April. The department was established on the basis that our industry is global and we need to be capable of helping our members access global markets. I have a background in international trade affairs, which is how I came to work at the CEA. I am responsible for two key areas within the department: helping our members negotiate partnerships with companies abroad, particularly in China at the moment, through the consumer electronics show (CES); and international trade policy – advocating free trade policies that help us expand markets for US manufacturers. ECN What exactly is the agenda of the CEA? KC The CEA is a not-for-profit organisation, which means that every dollar earned is reinvested in the industry. It was established by a group of manufacturers working in the radio industry. It was an audio-video manufacturers association until around six years ago when it started shifting its focus to better reflect what was happening in the consumer electronics industry. Now we have over 2,000 member companies ranging from consumer electronics vendors, such as Sony and Panasonic, to mobile phone companies such as Motorola, as well as members from a broad range of associated industries such as the media (ESPN for example) and retail. We have a very simple mission statement – to help expand the market for consumer electronics products. The CEA works in a number of ways: it works to shape technical standards in the US; it works with the US government to address key industry issues; it undertakes communications and promotions relating to consumer awareness of new technologies; and it works with the industry and retailers to make it easier for them to get particular products to market. It also looks at policy issues including copyright, environmental issues including product recycling and energy efficiency, and international trade issues. Then there are the events that we host. Shows such as the International CES help bring the industry together from around the world. The event attracts 150,000 attendees – this year 25,000 of those were foreign delegates. EH We also boast an extensive market research capacity at CEA, which provides invaluable industry data to our member companies. KC We compile an assortment of information across a host of industry segments. We track specific retail sales of various products for example in conjunction with our members. We then compile that information and produce an extensive industry forecast each year. This year we expect the US consumer electronics industry to be worth around US$135 billion. The CEA also conducts a significant amount of consumer research – everything from buying trends to what consumers are looking for in terms of specific products and their impression of emerging technologies. ECN What are the criteria for manufacturers or distributors interested in joining the CEA? KC Members must have an office in the US or be a sole distributor of a product in the country. We have recently opened an international division providing membership to companies based outside the US. EH We have an international affiliate programme that is a subset of our full membership. After two years the idea is that a member company of our international programme will have established an office in the United States and therefore be able to take up full CEA membership. KC It’s a way for international companies to test the US market and use us as a source of industry data to help them come to terms with the key trends at play in the sector. We are there to help them if they decide to formalise their presence in the US market. ECN You mentioned advocacy as one of your activities. What do you do in respect to this? EH As our stated goal is to foster commercial opportunities in the consumer electronics industry, we need to ensure that regulations don’t crop up that hinder growth. We cover a lot of different issues. We played a key role in advising the US government on the HDTV transition, consulting lawmakers about what was required from an industry perspective. For example, we knew that a firm analogue service cut-off date was required so that manufacturers could start to work towards that deadline and, in conjunction with the CEA, ensure that consumers were fully prepared for the transition. ECN HDTV is an international issue – do you consult with, or provide advice to, international industry bodies? EH We’ve had some dealings in terms of what’s going on in other markets but I think that each country has its own unique set of challenges to deal with in respect to HDTV. We try to keep third parties informed as to what’s going on in our market however.||**|||~|EH200.gif|~|Elizabeth Hyman, CEA vice president, International.|~|ECN Why do companies exhibit at the CES? EH There are a variety of reasons. Some companies get involved because they want to start selling product into the US market. For example, we have semi-conductor companies coming in looking for deals or manufacturers interested in finding partners based in the US. Then there are buyers who often come to take stock of the latest technologies or trends impacting the market. We consistently attract a considerable contingent of foreign exhibitors to the show, especially those from Taiwan, China and Korea. Last year for the first time we had two exhibitors from the UK. We haven’t managed as yet to attract an exhibitor from the Middle East but we did draw 82 attendees from the region to the 2005 event, with 40 of those from the UAE. ECN What are your impressions of the consumer electronics market in the Middle East? KC It seems that, especially in Dubai, there are similar processes occuring here as there are in the US market. However, there are some technologies that can be implemented here that prove more challenging in the US, such as home networking. For this type of technology to gain mainstream acceptance in America, many existing buildings would have to be substantially modified, which would ultimately prove quite costly. Here in the Middle East, with the boom in residential construction you have the advantage of integrating these systems now, as part of an initial building design. EH Interestingly, in markets outside the UAE they’ve leapfrogged into mobile technology and aren’t as reliant on telecom backbones. This creates avenues for opportunities with new applications in mobile communications. KC Several years back in the US, consumers wanted to start shifting their content around easily between different devices and once they got a feel for that they wanted to be able to do it in different ways. Connectivity has become key to new applications and I think that this market is mirroring that demand. It is clearly obvious in the Middle East that consumers are accustomed to change and I think that this makes the market open to rapid change in consumer electronics technology as well. ECN Are the varioous consumer markets of the Middle East generating interest among US-based manufacturers? EH Part of the reason we’re here is because our members, particularly those involved in manufacturing, asked us to come and take stock of the potential of the market. The fact that they’re asking us to explore this region tells me that there’s interest in finding out how they can expand their business here. Especially Dubai; it’s a city that’s creating a definite buzz in the US, which makes it even more appealing to our members. Many of the major Asian vendors are doing big business in the Middle East and I think that this is generating significant interest from US-based vendors. KC High-end niche consumer electronics manufacturers that specialise in products with a high degree of craftsmanship can benefit particularly from this market. ECN Do American consumer electronics vendors find it easy to do business in this region? EH At the moment the UAE is not a member of the Information Technology Agreement (ITA) at the WTO, which eliminated tariffs on IT products in 1997. It would be beneficial if the UAE joined the ITA because we see that as the first step to a broader acceptance of market liberalisation. Bahrain, Qatar and some other countries in the region are ITA members but I believe that the UAE is a leader in technology in this region and therefore joining the ITA would be a further expression of this position. KC The retail model here does seem to be slightly different to that in the US but I think it is one that US vendors can deal with since they are familiar with working with distributors to access local markets. ECN Are you looking to forge a partnership with Hometech or any other trade exhibition in the Middle East? KC It’s one of the things that we are exploring: looking at what opportunities there are and how interesting they would be to our members. We’re gathering information and our trip here has been a great opportunity to talk to a lot of key stakeholders in the industry. I think there probably are opportunities for us to support Hometech in the future but in what capacity we are yet to determine. ECN How do you think Hometech could be improved? EH We cover every facet of the consumer electronics and technology sectors. This is an aspect that Hometech organisers could further develop at future events. ECN US vendors are missing out on the potentially lucrative Iranian market because of the US trade sanctions in place. Have you received any feedback on this from US vendors? EH It’s not something that has been discussed. KC When we talk about global markets we talk about the Middle East or India for example but Iran has not been a topic of discussion at an official level.||**||

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