Phone business

Rising Costs, Depreciation of Rupee Affecting Mobile Sector

KARACHI: Local dealers, importers and mobile phone mechanics are suffering huge losses due to rising costs of imported mobile parts, depreciation of the rupee and lack of domestic parts manufacturers.

As countries around the world strive to advance and manufacture in the field of technology and computing; self-sufficiency and becoming a manufacturing base remains a distant dream for Pakistan.

The country is stepping up its efforts to become a manufacturing base for cellphone manufacturing companies, but there are no companies that manufacture parts for cellphones.

The country imports almost all moving parts from China to meet its demands such as mobile LCDs, charging socket, chips and others, which becomes expensive every time the rupee depreciates.

Muhammad Sarfaraz, importer and reseller of smartphone spare parts, said: “We import parts from China in dollars and the depreciation of the rupee increases their costs accordingly. Our sales are down about 30% over the past two years, while profits are down more than 50% from two or three years ago,” he added.

“As long as we don’t start manufacturing domestically, we don’t expect any change in the market and the prices of parts will be entirely dependent on the fluctuation of the rupee. Even if we start manufacturing, we will still import materials premieres from other countries, which won’t make a big difference.

“The country only assembles products and does not manufacture them entirely, whether it is smartphones, motorcycles or cars. We need to produce fully manufactured products to minimize the impact of the dollar on local business,” Sarfaraz said.

Faraz, a mobile parts retailer in Saddar’s mobile marketplace, said: “Sales were down about 15%, amid inflation. Government officials say the country exports cell phones to other countries, but the truth is that it does not manufacture these devices but only assembles them.

“Our local market for mobile devices and parts will only thrive when we do business in the local currency and for that we will need to find a solution to start manufacturing mobile devices and their parts,” he said. said, adding, “Every customer expects the same price for parts as two or three years ago, but we cannot afford to sell them at the same prices, which consequently affects our sales “, he added.

The rise in mobile parts is not only affecting the business of importers and retailers, but also putting pressure on local mobile phone mechanics who depend on the city’s Saddar mobile market to purchase parts.

Muhammad Iqbal, a mobile mechanic in a local neighborhood said, “Business is down due to rising parts prices. Prices for parts such as an LCD screen, charging jack, microphone and speaker have more than doubled. While customers are asking for lower prices and labor because their incomes have gone down.

“LCD panels and charging sockets for smartphones, which would cost around Rs 3,000 and Rs 50 respectively, are now available at Rs 4,500 and Rs 200. If we add our labor to this cost, it becomes very expensive for the customer to change parts of their mobile phone,” he added.

“The same goes for low-cost cell phones. Prices for 2G cellphones (touchtone phones) and its components have also been on the rise as retailers say they are getting imported items.

“Our revenue has not decreased much, but the profit margin has become smaller, while we have to keep inventory of parts for different models of devices, which leads to more investment compared to revenue,” said Iqbal.

Pakistan, a net importer of mobile phones before 2016, produced 22.12 million handsets between January and November 2021 and imported 9.95 million during the same period, according to data from the Pakistan Telecommunications Authority. (PTA).

In 2020, Pakistan imported 24.51 million mobile phones compared to 13.05 million locally produced devices.

Various Chinese mobile phone manufacturers have played a key role in Pakistan’s production boom in 2021. Itel, with 3.91 million mobile devices manufactured, tops the list; followed by VGO Tel at 2.97 million, Infinix 2.65 million, Vivo 2.45 million, Techno 1.87 million, QQMEE 0.86 million and Oppo 0.67 million, according to the PTA.

Local manufacturing plants assembled 9.03 million smartphones, while the number of 2G mobile phones was 13.09 million.

Even though the country plans to expand its mobile phone exports, this also comes at a price as almost no part of these devices are manufactured in the country, but companies export parts and devices and have set up assembly plants where they assemble the devices. to market them on the local market or export them.