IMPACT OF INVERTER REFRIGERATOR ON THE

ECONOMY OF KARACHI

Prepared for Mr. Muhammad Rafiq (CEO)

R&I Electrical Appliances (Pvt.) Ltd

Prepared by
Maheen Irfan (ACF-Honors)
Alvina Aamir (ACF-Honors)
Hasan Ali (ACF-Honors)
Muhammad Zain (ACF-Honors)
DA Consultancy

April 19, 2022

 LETTER OF TRANSMITTAL
DYNAMIC APPLIANCE CONSULTANTS
www.dynamicappliance.com
A-32/3, Queen Road
Lalazar, Karachi (021)
356-307-98
April 19, 2022

Mr. Muhammad Rafiq

R&I Electrical Appliances (Pvt.) Ltd

Dear Mr. Rafiq:

Here is the report authorized by you on 3rd April 2022, which describes the impact of inverter
refrigerators on the economy of Karachi. We are confident that the results of this research will
help analyze and assess the production of inverter refrigerators in the upcoming time.

This study aims to examine the economic impact of the key aspects below:
 The efficiency of the inverter refrigerator.
 Current and projected revenue generated by the production of inverter refrigerators.
 Indirect effects on local employment, income, and economic growth.

Primary research was conducted among local people of Karachi, companies, and hospitals
through questionnaires amongst which 128 samples were collected. Secondary research sources
included proprietary databases and annual reports. We also referred to industry associations,
research papers, blogs, news articles, and online resources. Moreover, the results of this study are
discussed more thoroughly in this report, which specifies that the Inverter refrigerator brings
substantial advantages to the economy of Karachi.

Therefore, we will be pleased to discuss this report and the key findings with you at your request.
I, along with my firm thank you for giving us this opportunity to address this matter. We would
like to work with you in the future to prepare such a neutrally beneficial comprehensive report.
Sincerely,

Maheen Irfan (ACF-Honors)

Alvina Aamir (ACF-Honors)
Hasan Ali (ACF-Honors)
Muhammad Zain (ACF-Honors)
DA Consultancy
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 TABLE OF CONTENTS

LETTER OF TRANSMITTAL.......................................................................................................i
EXECUTIVE SUMMARY.............................................................................................................ii
1) INTRODUCTION………..........................................................................................................1

1.1. Problem...............................................................................................................................1

1.2. Background…………………………………………………………………………..1

2) DISCUSSION OF FINDINGS.................................................................................................. 2

2.1. Revenue............................................................................................................................2

2.2. Employment………...
…………………………………………………………………...2
2.2.a Wages………………………………………………………………………………3
2.3. Efficiency...................................................................................................................
........3

3) CONCLUSIONS AND RECOMMENDATIONS …………………......................................4

4) REFERENCES…………………….........................................................................................5

5) LIST OF FIGURES
5.1. Figure 1 Revenues generated from the production of inverter refrigerators………...2
5.2. Figure 2 Pakistan’s Unemployment rate and Employment-to-population ratio………..3
5.3. Figure 3 Comparison of compressor rotation…………………………………………..4
 EXECUTIVE SUMMARY

Dynamic Appliances Consultants gives an analysis of both direct and indirect economic benefits
of such refrigerators. The study was authorized on behalf of R&I Electrical Appliances for their
proposed innovation of Inverter Refrigerators. The company requested evidence demonstrating
that this introduction could benefit the economy as a whole.

Our conclusion that the introduction of Inverter Refrigerators can benefit the economy is based
on both primary and secondary data collected. It was supplied by a survey of 500 local people of
Karachi, companies, and hospitals through questionnaires and personal interviews. Secondary
data was supplied by research papers, blogs, annual reports, and a proprietary database of
companies. The analysis of the research revealed the benefits in the following three areas:
 

 Revenue: The city of Karachi earned its revenue through electrical appliances during
covid-19. By 2025, this revenue is expected to increase to US$2,875.00m, an increase of
5.41%, as a result of these refrigerators.

 Employment: Until 2016, technological advancement caused the unemployment rate to

fall from 10% to 4.6%. It is expected to fall further till 2025 due to advancements in
refrigerators, with an increase in salaries of over $100m.

 Efficiency: By having a total energy consumption of 0.55kWh/24hr, inverter

refrigerators can save up to 20% to 30% of electricity, solving the issue of shortage of
electricity in many areas of Karachi.

Based on these findings, it is recommended that the industry should move forward with its plan
of introducing inverter refrigerators to stimulate local economic growth.

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 INTRODUCTION

Problem

This study aims to analyze the direct and indirect economic impact of Inverter Refrigerators
on the city of Karachi. Specifically, the study seeks answers to these questions:
• In what ways are these refrigerators efficient for the economy?
• How much additional revenue will result directly from this innovation?
• What indirect effects will inverter refrigerators have on local employment, incomes and
economic growth?
Background

The development firm of Dynamic Appliances commissioned this study of Inverter

refrigerators at the request of one of the leading home appliances company Haier
Pakistan. Haier company requested a study examining the economic impact of an inverter
refrigerator in Karachi and wanted to determine to what extent inverter refrigerator will
benefit the society as a whole. In order to understand the economic impact of inverter
refrigerator, first we need to understand how conventional refrigerators work. The
compressor used by the traditional refrigerator is of single speed type which only operates
at one speed. In a day, a traditional compressor goes through a cycle of on and off at
constant speed due to which the power consumption is typically between 1500 to 1800
kWh/year but the inverter refrigerators have been designed so that cut the electricity
consumption from about 500 to 380 kWh/year. According to an article published in 2016
inverter refrigerators can save up to 20 to 30% energy as the compressor fitted init can
operate at various speeds and at low speed it runs in a longer cycle. According too many
surveys one of the main reason behind the production of inverter refrigerators were to
decrease the chances of failure to maintain its durability by making a compressor which
starts slowly.
The prominent companies are focusing now on inverter refrigerators more than ever
before because of its benefits such as low power consumption, low noise operation and
ability to adjust the cooling speed. The inverter technology segment was valued at USD 40
billion in 2020 and it’s estimated that till 2027 the market size of inverter refrigerator
will increase more than the conventional refrigerators.
The data for this study came from articles that were published in 2016, 2017 and 2020 in
which they conducted interviews with more than 500 consumers to get the idea about
what economic impact inverter refrigerators had on their lives. We also collected data from
books, online sources and questionnaires.

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 DISCUSSION OF FINDINGS
The result of this research shows the overall economical impacts of inverted refrigerators in the
city of Karachi. The research findings presented here fall into three categories: (a) Revenue (b)
Unemployment (c) Efficiency
Revenue
Figure 1: Revenues generated from the production of inverter refrigerators

 The figure 1 above shows the production of inverter refrigerators in Pakistan and the
revenues generated from it . In 2020 when the economy was devastated due to covid- 19
home appliances played an important role to save the revenues of the country among
which one of the mostly demanded home appliance was inverted refrigerator. The
Pakistan Refrigerator Compressor market growing at a compound annual growth rate
(CAGR) of 3% during the forecast period from 2021 to 2027. Revenue is expected to
show an annual growth rate (CAGR 2022-2025) of 5.41%, resulting in a projected market
volume of US$2,875.00m by 2025.

Employment

Figure 2 : Pakistan’s Unemployment rate and Employment-to-population ratio

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 Technology changes the nature of jobs. Even though some jobs will become redundant,
technological advancement has the potential to create many more employment opportunities
than it eliminated. Due to technology, demand for technically skilled youth is increasing and
hence there are more jobs available for educated youth. This can solve the problem of
educated unemployment to some extent. From the figure above we can clearly observe that
from 2010 there has been a decline in unemployment ratio and from 10% it came to 4.6%
until 2016 because advancement in technology helped companies making huge profits due to
which more tax has been generated and more job opportunities became available.

Wages:
The beginning of the 20th century saw the start of the Second Industrial Revolution, an era
connected with the introduction of electricity, the automobile, and the petrochemical industry. It
also witnessed the advent of new household technologies now fixtures of everyday life: central
heating, electric irons, frozen foods, refrigerators, sewing machines and washing machines
etc. Real wages rose due to technological progress in the market sector that increased the
marginal product of labor. That is, for any given level of employment in the market sector, an
extra unit of labor could produce more over time. This made labor more valuable. And the
gender wage gap also shrunk. In 1900, a working woman earned about 50 percent of what a man
did, and by 2000 this number had risen to 72 percent this became possible just because of the
advancement in technology.

Efficiency:
Inverter in refrigerators works which eliminates the power consumption by efficiently
controlling motor of the refrigerator which allows the thermostat to be stabilized. When
the temperature of the cooler is stabilized, the power automatically reduces which makes
it compressor different from the compressor of the conventional refrigerator. The
advantage of an inverter compressor is that it can work at various speeds, depending on
the need of the refrigerator. In the figure attached below, it can be observed that the
power of an inverter when started is high that is 5000 , after which it starts to decrease
slowly and gradually until it reaches 2000 kw, whereas conventional power consumption

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 is clearly visible that it still consuming 5000 kw. While stabilizing the temperature is
where the inverter benefits the most, it saves upto 20 to 30% of the electricity, which
benefits the economy of the Karachi as there is already a shortage of electricity in
Karachi and relatively efficiency is low, so the inverter refrigerator will help in reducing
the electricity. Moreover, there is voltage fluctuations problems in Karachi too where
sometimes the supply of voltage is either high or low which can easily fuse the non
inverter compressor, whereas inverters can manage the pressure thus saving electricity
which can be a positive impact on the economy of Karachi as the saved electricity can be
used somewhere else for the purpose of production or recycling. In addition to that,
inverters can work on generators also as they consume less electricity which can be the
huge benefit for the economy of Karachi as there’s high load shedding and this will save
costs thus saving expenses which will increase economy of Karachi.

CONCLUSION & RECOMMENDATIONS

Analysis of sales revenues, employment data, and efficiency control leads to the following
conclusions and recommendations about the economic impact of inverters on the city of Karachi:
 During the forecast period from 2021 to 2027, the Pakistan Refrigerator Compressor
market is estimated to develop at a compound annual growth rate (CAGR) of 3%,
resulting in a projected market volume of US$2,875.00m by 2025.

 Because of technical breakthroughs in the world, as well as in Pakistan, such as inverters,

the unemployment rate fell from 10% in 2010 to 4.6 percent in 2016. This is because
advances in technology let enterprises to make significant profits, resulting in greater tax
revenue and more job opportunities.

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  The total energy consumption of an inverter is 0.55 kWh/24hr, which saves up to 20% to
30% of electricity, which benefits the Karachi economy. Because there is already a
shortage of electricity in Karachi and relative efficiency is low, the inverter refrigerator
will assist in reducing electricity consumption by stopping at a specific temperature,
resulting in less energy consumption.

REFERENCES

JOE SYMMONDS (2008), www.medium.com

ZHANG RUIMIN (1984), www.haier.com

ARCELIK (1980), DAWOOD BASHIR (KARACHI), https://www.dawlance.com.pk/

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