Ecuadorian manufacturers complain about imported Chinese induction stoves

Ecuadorian manufacturers of electric induction stoves, including Mabe, Indurama, and Fibroacero, are angry about a government announcement that imported Chinese stoves and ovens will be allowed into the domestic market. Last week, the government announced that the Chinese stoves will arrive in local stores at a lower cost than those produced in Ecuador, and will include a set of Chinese cookware.

Enrique Arosemena, manager of the government’s Replacement Project of Liquefied Gas Oil for Electricity program, said that the stove tops with four ceramic burners will be sold for $200, and stoves with an oven will cost $300, substantially below the price of similar domestic stoves.

Diego Malo of Fibroacero was surprised by the announcement.  He says that the low cost of these Chinese products will negatively effect the national industries through loss of  jobs and tax revnue.

Roberto Jouvín of Mabe questions earlier investments made by domestic manufacturers based on assurances by the government of profitable returns. “Why invite us to invest and produce?” he asks. “This hurts the domestic industry,” he said.

Juan Pablo Vela of Cuenca’s Indurama was more concerned with quality or imported stoves than price competition. “Price is not everything. A high quality product costs more to produce but it will perform better and last longer.”

Off the record, several industry representatives said that Chinese products are generally inferior. “This is well known and the government knows it,” said one appliance maker. “Ecuador has recalled dinnerware and building supplies from China because they contained toxic chemicals. There is an established record from the Chinese of producing poor and dangerous products.”

President Rafael Correa said last week that the imports will be checked for quality. They have contracted companies to check for standards that are “the most stringent in the world, for quality control. Do not worry. This is equal to or better than a German kitchen.”

The plan to transition Ecuadorian households from LP gas to more electric usage was announced in August 2013.

The program was coupled with the announcement that the subsidy of LP gas would end in late 2016, although later statements suggested that it would continue until early 2017. Under the subsidy, residential consumers pay 15% to 20% of the international market rate for gas.

In exchange for ending the subsidy, the government offered low interest loans for the purchase of electric induction cook tops and said it would lower electric charges on the first 60 kilowatts of household electric usage per month.

When President Correa announced the program in 2013, he said the end of the gas subsidy would reduce pollution, improve household safety and save the country $700 million to $800 million annually, enough to build and reconstruct 1,000 schools a year. He also argued that the subsidy has been misused. “It was not intended to heat the swimming pools of rich people in Cuenca and Quito. The subsidy was meant to help poor people cook their meals,” he said.

The government program to convert to electric cooking is far behind the schedule first announced, industry analysts say. The slow start prompted the government to slap a 100% tax on gas cook stove last year aimed at forcing consumers to buy electric, they say.