September 15, 2012 in Business

American products are hot sellers in Iran

Despite ever-tighter sanctions, iPhones and Nikes are easy to find
Nasser Karimi Associated Press
 
Associated Press photo

Iranian worker Mahmoud Kouhi adjusts family-size bottles of Pepsi in a grocery store in Tehran, Iran, last week.
(Full-size photo)

TEHRAN, Iran – The Great Satan still sells in Iran.

Even after decades of diplomatic estrangement and tightening economic sanctions, American products manage to find their way into the Iranian marketplace. The routes are varied: back channel exporters, licensing workarounds and straightforward trade for goods not covered by the U.S. embargoes over Iran’s nuclear program.

It offers lessons in the immense difficulties facing Western attempts to isolate Iran’s economy, which has deepening trade links with Asia where distributors serve as middlemen to funnel U.S. and other goods to Iranian merchants. But sanctions are also battering Iran’s currency and driving up costs for all imports, which could increase domestic pressures on Iran’s ruling system.

Although the number of Made-in-America items in Iran is dwarfed by the exports from Europe, China and neighboring Turkey, some of the best-known U.S. brands can be tracked down in Tehran and other large cities. It’s possible to check your emails on an iPhone, sip a Coke and hit the gym in a pair of Nikes.

“I’m always looking for what new Apple products are in the windows,” said Kamyar Niaki, a 19-year-old freshman at Tehran’s Azad University, as he played Angry Birds on his iPhone 4S – about $800 in Iran – at a northern Tehran shopping mall popular with young people for its selection of computers, mobile phones, software and apps.

Similar trade routes from the Far East or nearby Dubai also bring in Westinghouse appliances and Microsoft programs. And they were probably also responsible for the Epiphone model guitar by Nashville-based Gibson that Ali Mahmoudi bought for his oldest son last week for about $1,200 – more than double the price in the United States.

“My son learned from his classmates in high school that American guitars are still the best,” said Mahmoudi, an engineer.

The U.S. became vilified as the Great Satan after the 1979 Islamic Revolution, and chants of “Death to America” remain a staple at Friday prayers at Tehran University. But even Iran’s leadership could not stamp out the taste for Coke and Pepsi.

Both iconic American drinks have been mainstays for years in one of the Middle East’s largest consumer markets with 75 million people. The U.S. Treasury sanctions on Iran give some leeway for food and beverages, allowing The Coca-Cola Co. and PepsiCo to work through non-U.S. subsidiaries to ship their syrup to Iranian bottlers and distributors.

It’s brought some backlash from hard-liners who cringe at the popularity of Coke and Pepsi at the expense of local rival Zamzam Cola, named after a venerated well in the Islamic holy city of Mecca. Zamzam is owned by a government-backed foundation.

“Since a long time ago, Iranians have learned that American products are among the best,” said Masoud Mohajer, an economic columnist who writes for Iranian newspapers and journals. “If the government bans them, they will infiltrate the Iranian market through smugglers since there is a market for them because of their reputations.”

Much of the sanctions-covered American products arrive via networks in Asia in which buyers legally purchase U.S. goods and then reship them to Iran. Previously, the primary route was through Dubai, but authorities in the United Arab Emirates have significantly stepped up inspections of Iran-bound cargo for possible U.S. sanctions violations.

Jafar Tehrani, a Tehran-based technology industry analyst, said the UAE is still a main jump-off point for iPhones and other Apple products coming to Iran.

“Technology does not recognize borders. Apple is very popular in Iran, and customers have no problem except after-sale services,” Tehrani said.

This is where hackers such as 23-year-old Amir comes in. He charges between $5 and $10 to “jailbreak” an iPhone to work on Iran’s domestic mobile network. “I have 10 to 15 customers every day,” said Amir, who gave only his first name because reprogramming the phones is illegal.

For Iran’s extensive middle class – many with university degrees and near Western-standard lifestyles – the blows to their buying power could bring more heat on authorities as they try to ride out sanctions.

Amir summed up his slice of Americana in the middle of Tehran: “I earn from Apple, I drink Coke and I dream of buying a Ford Mustang.”

© Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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