SME FOCUS: The new merchants of mobile miracles, Potraz report shows decline in Internet penetration

Mrs Ncube
Mrs Ncube

Gloom for cellphone shops

Even though the outlook might look bullish for pavement vendors, it is definitely bearish for formal businesses.

It seems the former has successfully wrested the market from brick-and-mortar ventures.

Margins are being squeezed by a combination of softening demand and the burden of settling statutory obligations, rentals, utilities and salaries.

Goldtech Electronics marketing executive Ms Nontobeko Ncube says the cell phone business is on the decline.

The restoration of the 25 percent custom duty on ICT gadgets in October 2014 by Government has also not helped.

Mr Gwatidzo
Mr Gwatidzo

Instead, it has since sparked a frenzied demand for counterfeit phones.

“Honestly speaking, business is low, very low. I think it is due to the fact that phones are now very expensive than they used to be when there was no duty and it is like we are not selling anything at the moment because you cannot even count for it.

“In terms of cell phones, I can say we are not selling anything apart from small items – accessories – such as chargers and batteries which are going for about US$3 to US$4.

“People are now buying Chinese phones on the streets but they eventually come to us for original accessories.

“And because we have technicians, the sellers refer them to Goldtech for repairs and original parts such as LCDs, some of which are not readily available because the phones are fake,” said Ms Ncube.

She also added that most clients, despite having nasty experiences with counterfeit phones, will most likely buy the same gadgets because they are affordable.

But pavement vendors do not only sell fake products.

It is believed that some of the phones are actually genuine phones that would have been smuggled into the country is small quantities.

This coupled with little operational costs will naturally make the products cheaper.

“A phone that could be sold for US$200 in a shop is sold for US$70 on the street because they (traders) are not encountering any expenses such as duty, and other overheads.

“For them, there will be no need to sell at a high price because all they want is their money back and a US$10 to US$15 profit,” explained Ms Ncube.

Bethel Communications, which manufactures the Astro mobile phone, is also facing the same challenges.

CEO Mr Munyaradzi Gwatidzo said last week business had gone down significantly, prompting the firm to consider downsizing.

Mr Gwatidzo said pavement traders have become the biggest challenge to their operations, followed by the general cash shortages in the economy.

“Business is difficult at the moment; we are selling about 1 000 phones per month from 10 000 pieces in the recent past as people cut down on luxury items.

“Smartphones are now seen as luxury items and people now want anything as long as they can communicate.

“Apart from cash shortages, one of our biggest challenges is street vendors who sell phones. Inasmuch as people do not have a lot of money to spend on fancy phones, they are still buying the sub-standard and unbranded Chinese phones.

“So these guys are affecting us the most as people are buying phones from them because of their low prices. There is regard about the quality or originality of the phone; they just buy anything that is cheap.

“Most of their phones are smuggled and do not pay duty and value added tax and we therefore cannot compete with them in terms of pricing,” said Mr Gwatidzo.

He claimed the country did not have sufficient laws to protect consumers from goods that do not meet certain specifications and standards.

In Zimbabwe, having goods that meet certain standards is not mandatory and is at the company’s discretion, mainly those angling for international markets.

Said Mr Gwatidzo: “This is why we now have fake Nokia and Samsung phones being sold at Gulf Complex and other parts of town and nothing is happening to those people.”

 

Meeting half-way

 

But as part of an ambitious plan, Astro plans to co-opt pavement traders in order to create employment and reduce the hassle for customers.

The company recently launched booths or display units that will be handed over to an estimated 1 000 street vendors.

The company is looking at rolling out about 1 000 display units around the country beginning next month.

“Under the exercise, we will give them our phones at wholesale prices and the booth for free.

“This should be ideal for them because there is no initial investment since they get everything for free.

“By incorporating the vendors into our system, we are confident we can survive the current challenges. Tentatively, the people we co-opt will also create about 2 000 to 3 000 jobs,” explained Mr Gwatidzo.

But Astro has bigger plans to try and turn the tide.

Plans are already underway to build a US$10 million manufacturing plant for technological devices.

All the components required in setting up the plant, which will be located in Msasa, are already in the country.

“We are planning to set up our manufacturing plant in June this year.

“Once the manufacturing plant is up and about, we are going to reduce costs of producing the phones and the cost to the end user also declines. That might stimulate demand for our phones.

“The plant is a US$10 million project and I think it is going to be the first cell phone assembly plant in Africa.

“We plan to turn the plant into an electronic manufacturing hub and that will allow us to export some of the products to regional countries.

“That is the major strategy at the moment and I think we can do more,” said Mr Gwatidzo.

If the plant is set up, Zimbabwe will join Congo Brazzaville which has a cell phone manufacturing company called VMK.

Since launching in 2009, VMK has rolled out three locally-designed devices in Congo – the Way-C tablet, the Elikia smartphone, and a low-cost feature phone intended to increase access to mobile communications across society.

The plant will serve as a launch pad for regional ventures in South Africa, Mozambique, Tanzania, Zambia and Botswana.

1,266 total views, no views today