Most of the participants in the 7th Annual Armenia-Expo (September 14-17, 2007) trade and industrial exposition were importing companies.  Without counting information and publishing companies, of the 89 producers, only 33 actually manufactured local products - the rest presented imported items including construction material, machinery and food.  Most of the Armenian products presented were food items - mineral water, alcoholic drinks, meat products and semi-processed food, dairy products and ice cream.  Construction material and technical material made up a smaller part of the local products.

In his welcome speech to the audience, Arsen Ghazaryan, President of the Armenian Union of Manufacturers and Businessmen, said that “the productivity of industry and healthy competition” was rising in Armenia.  The Armenian businessmen who participated in the exposition were of a different opinion.

Armen Paniryan, Vice-President of the Yerevan leather goods factory said that the domestic producer was “mired in imported products”.  The leather goods factory reopened in 1996.  It usually operates only when there are special orders, because the domestic market is already flooded with Chinese and Turkish bags, belts and different kinds of coats.  “No matter how much we try to lower the cost price of our products, we can never make it cheaper than Chinese bags.  We are the only ones in Armenia who make schoolbags, but thousands of them are imported from abroad at only half the price,” said Paniryan.

Mr. Paniryan would not even think about exporting products.  “Our products are not bad, but it is not likely that Armenian bags would be competitive abroad, especially because the cost price would go up if we exported.  The last time we got an order from Moscow was in 2006.  There are spheres of production in Armenia, which cannot develop by themselves.  The problem would not be as serious if there were a higher duty on imported items, maybe then we would have some breathing room.  But the roads are always open to importers,” said Paniryan.

Entrepreneur Vram Saroyan has been operating a small potato chip unit in his village of Ushi (Aragatsotn) since 2002.  The company imports potato powder from Ukraine and spices from Poland, but cannot export the ready product abroad.  “We tried to export to Georgia once, but Ukrainian companies flooded the Georgian market with chips and we were literally left out.  Meanwhile, Iranian, Turkish and Russian chips occupy 80 percent of our domestic market,” said Avegis ltd. company director Vram Saroyan.  There are another two or three potato chip plants operating in Armenia.

The heads of both of these manufacturing units said that their capacity for production and work was more than what the domestic market was consuming.  The possibility for export is also very limited for products with short shelf lives, due to problems with transport costs and time.  Luma, a local company producing meat products and semi-processed food, failed at exporting in its very first attempt.  “We tried to export a small batch to Georgia, but the export costs were a lot higher than the products’ value.  The domestic market is saturated with meat products.  We are currently working on increasing variety and improving quality, so that we stay afloat,” said Sevak Davtyan, director of Luma.  The company has been operating in Abovyan since 1997.

Armenian companies producing construction material also had a modest presence at the exposition.  Lavrenty Avagyan, deputy director of tile-manufacturing company Bekas, considered the dollar-dram fluctuations to be the main obstacle to his business’ development.  “We don’t export, it doesn’t make us a profit.  We have 12 years’ experience, we have the capacity to produce and a good knowledge base, we offer a 30-year guarantee, but we are forced to limit ourselves to Armenia.  The cost price goes up a number of times when you export.  We tried to take our products to Georgia earlier this year and then gave up the idea,” said Avagyan.  Bekas has been operating in Charbakh since 1995.

Bison was established as a company in 1994.  It produces vegetable oils (using rosehip, apricot, sea buckthorn, peach, almond, pomegranate, grape and pumpkin seeds) for nutritional, medical and cosmetic use.  The products are exported in small quantities to the USA and Japan, but only in case of special orders.  Such random orders are usually the case when the products of small Armenian companies end up in the foreign market.

The average salary of workers in these Armenian companies is around 30,000-40,000 drams.

The following quotes about local producers, exporting and competition were made by a number of officials during the exposition.

“The basic direction of the economic policy of the government is the expansion of current capacities using the latest technology and assisting in exports,” said Prime Minister Serzh Sargsyan.

“During recent years, Armenian companies have been carrying out large projects - new technologies are being used, investments are being made, local raw material is being used in large amounts and a lot of attention is being paid to staff improvement which directly results in production on par with international requirements. So the productivity of the industry and healthy competition are being developed,” said Arsen Ghazaryan. 

The number of companies participating in Armenia-Expo 2007 and the volume of Armenian made products contradict the Armenian officials’ statements.  It seemed that the exposition could provide incentive for new imported products into the country, but never for the export of products made in Armenia.