Imports of mobile phones to Brazil

Imports of mobile phones to Brazil have soared in the early months of this year. Between January and April, the value of incoming mobile phones rose to US$232 million, an increase of 148% over the same period last year.

Unit volumes show that imported equipment increased from 853,000 in 2010 to 2.9 million units (an increase of 240%) in 2011, according to the Ministry of Development, Industry and Foreign Trade.

So, mobile purchases over the past four months account for more than half the total phone imports over the previous year.

The low US dollar exchange rate and growing demand for phones are the main reasons for the demand.

Imports are more competitive, thanks to the US dollar's lower rate at a time when suppliers, telecom operators and retailers are aiming to boost sales of smart phones.

In 2010, five million Brazilians bought these smart devices, while this year the forecast is put at about 10 million units.

Expensive devices mainly account for the jump in imports. This is true for Apple's iPhone as well as Desire A from Taiwan's HTC, as well as various BlackBerry models.

However, most imports are aimed at the lower-end market. This is being flooded with new and cheap handsets, brought to the country from little-known manufacturers.

Retailers show that mid-range brands such as ZTE, Huawei, Alcatel, Meu Celulares, Freecel and even the GPS manufacturer, NavCity, are gaining room on the shelves.

The marketing offensive by these brands reflects a change in the competitive state of Brazil's telecom market. According to consultancy GfK, the five major mobile brands in Brazil lost 5.6% of market share in the 12 months to March, from some 98% of total sales.

Over the same period, the number of mobile phone brands increased from 14 to 20.

Another consequence of the move to mobile is the reduction in prices of mobiles sourced abroad: the average unit value fell from US$109 between January and April last year to US$77 in the same period in 2011.

Without intermediary telecom operators, equipment features are increasingly attracting the attention of consumers, with many people requiring phones with more than one microchip to accommodate functions.

Supporters of prepaid plans that rely on credit and debit cards opt for one microchip lodged with each telecom operator in order to take advantage of the promotions of all.

Price is another important attracting factor. For example, Alcatel's device featuring a digital camera, two microchips and hardware keyboard is on sale for US$121. LG's similar model, made in Brazil, is available for about US$304.

A company executive for a firm that produces mobile phones overseas says companies with factories in the country underestimated domestic demand, which is opening for new brands that bring equipment, mainly from China. "Retailers are looking for new suppliers," said that executive.

As demand for mobile connection continues to grow for the medium term, Hong Kong companies have excellent business opportunities in the Brazilian market both for phones as well as components. The market is open to little-known companies, given that the new Brazilian middle class focuses on price rather than on brand.