The past year was difficult for mobile phone distributors and dealers as the government restricted the import of mobile phones costing over USD 300 per unit for eight months starting from April coupled with a decline in market demand as the economy slowed. However, with the government lifting the import ban and the hope that the Mobile Device Management System (MDMS) will be implemented, they are now expecting normalcy to return to the handset business. Niru Dhougoda is the Senior Marketing Manager at Ramesh Corp. She joined Ramesh Corp in October 2014 and has been a key member working for several brands within the group. In a conversation with the HRM, she talked about the current state of the handset market, ways to control the grey market sales of mobile phones, and upcoming launches of Xiaomi in the domestic market, among other topics. Excerpts:
The government has lifted the eight months long restrictions on the import of mobile handsets. How do you expect the business will bounce back?
Although the government has lifted the restrictions on the import of mobile handsets that lasted for almost eight months, the banking process is yet not back to how it usually functions. We are facing the brunt of the liquidity crunch and the market is operating slower than usual. All these factors have accounted for the sales of mobile phones to decrease by more than 50 percent.
In the current market scenario and considering the day-to-day lifestyle of the consumer, a smartphone does not fall under luxury items rather it is a basic necessity and an important aspect of the living style. Smartphones have also been of utmost priority for consumers’ personal and professional requirements. Hence, we are hopeful the market will bounce back.
In addition, with the implementation of MDMS (Mobile Device Management System), the full functioning of the new government, and the end of import restrictions, we expect the mobile phone industry business should be only better in the coming days.
How was the growth of mobile phones impacted by the import restrictions over these months?
In April, the government announced the ban on luxury items considering the depletion of the country’s foreign exchange reserves. Initially, the government had announced the ban would continue until the end of the fiscal year (mid-July). But, since then it was extended up to mid-December 2022.
Indeed, the import restriction has impacted the overall industry. However, the import was restricted to mobile phones above the value of USD 300 only which meant it had a material effect on fewer mobile brands only and if you compare the effect of the import restrictions, the overall mobile industry was less affected than say automobile industry.
The import restriction was basically on the high-end and flagship smartphones. The sweet spot for mobile phones lies between USD 100 to USD 200 smartphones where the large scale of handsets trade takes place. Brands like Samsung and iPhones were the ones affected more. As a whole, consumers did not have the luxury to purchase the premium smartphones of their choice and the government also lost a huge chunk of tax revenue that it normally would have collected from the import of high-value smartphones.
What anomalies in the market have you observed over this period?
Nepal is a unique economic zone where the tried and tested economic theories seem to not work as they would normally work in other countries. For example, the purchasing behavior of Nepalis is majorly based more on the emotional factor. The rule of demand and supply works differently here.
The way the lifestyle of Nepalis has been able to imbibe the mobile industry is very surprising if we compare it to the GDP of the nation. Approximately, 35 percent of Nepal’s population uses feature phones whereas the remaining 65 percent is identified as smartphone users. Price is definitely the major influential factor while purchasing any handset but surprisingly, Nepalese customers know what they actually want and go for it despite their financial restrictions to some extent.
What needs to be done to control the influx of illegal sales of mobile phones?
The sales of illegal mobile phones usually through the gray market have been a great hurdle not only for distributors but also for the government as it impacts revenue collection and the end users are also affected in terms of price, warranty and after-sale service which is quite important for any electronic gadgets including but not limited to mobile phones.
The issue of grey handset trade is far beyond the units that are imported through the international airport. Nepal having an open border with India has resulted in the import of gray handsets into the Nepali market being relatively easy which has hugely affected the tax collection for the government which they would have normally collected if they were imported legally. For each handset, the government is losing excise duty and VAT in the range of 2.5 percent and 13 percent, respectively.
Successful implementation of MDMS is one of the effective ways to control the influx of illegal sales of mobile phones. Under this system, any handset that has been imported into Nepal without paying government taxes and registration will be considered illegal and will not receive the network. The Nepal Telecommunications Authority (NTA) and the Mobile Phones Importers› Association (MPIA) have been running various campaigns time and again to make everyone aware of this system. As a result, end users these days seek the national distributor name + MPIA hologram sticker on the handset to validate its genuineness and also seek a proper tax invoice and valid after-sales warranty card. With the effective implementation of MDMS, people who import illegal handsets will be discouraged.
Similarly, consumers also need to reconsider their habit of buying illegal handsets and only opt for legally imported handsets. When end users reject gray handsets, the import of such mobile phones becomes futile. The change has already started.
How is Teledirect Pvt. Ltd. preparing to bring new products of Xiaomi in the Nepali market?
Teledirect Pvt. Ltd. is the national distributor of Xiaomi mobile. Xiaomi is known for its varied range of handset options which is also the best value-for-money product in the market. Xiaomi not only sells smartphones but also television, accessories, and home appliances including but not limited to air fryers, air purifiers, etc.
We continuously interact with our retailers and consumers through various platforms to understand consumer trend and their preferences. As I mentioned earlier,
Xiaomi not only deals with multiple brands of mobile phones but also various lifestyle products. It caters to the needs of all the varied consumers throughout Nepal.
At the moment, we are looking forward to introducing more SKUs in terms of smartphones, accessories, and IoT (internet of things) products that will definitely add value to the living style of Nepalese consumers. We shall also launch all the possible smartphone models that are available in the global market.
We are proud of our massive distribution channel with more than a decade of experience and market operation. Nepali customers living in every nook and corner of the country will get to experience Xiaomi products.
What new flagship models of Xiaomi Nepali gadget lovers can expect to buy? When will the models be available in the market?
Xiaomi flagship handsets are always the most awaited product among our MI Fans. Our flagship model for the year 2022 was Xiaomi 12 series which included various smartphone models, such as Xiaomi 12, Xiaomi 12X, Xiaomi 12 lite, and Xiaomi 12 Pro. These models were highly appreciated for their sturdy look and overall functions, especially performance, quick charging and amazing camera. Personally, I am a Xiaomi 12 Pro user and is a satisfied customer.
We can expect the launch of the Xiaomi 13 series by mid-2023. We are really excited to launch Xiaomi 13 series and see the products rule the Nepali market.
What new and advanced features gadget buyers can expect from the upcoming handset models?
Technology is always evolving, and we are no exception. Since the inception of mobile industries, we have seen so much development and innovation in this industry that has changed the way people live. Innovation has been a part of the mobile industry that has never failed to surprise the end user. From VGA cameras to 108 megapixels, 1.5” LCD screens to foldable screens, and 32 MB internal space to 256 GB internal space, we have seen so much great evolution in this industry.
The future handset models definitely hold unimaginable advancement. You will be able to control the activities in your home with a touch on your smartphone sitting at your workplace or vice versa. The usage of IoT is yet to be explored and experienced in Nepal which has already facilitated the life of working people abroad.
All the upcoming handsets will be 5G enabled. The majority of newly launched handsets will get the new MIUI 14 OS. Xiaomi will have smartphones of all ranges and features depending on your preference and your pocket size.
Given the current economic slowdown in the country, many mobile phone dealers are expressing their concerns that it will take time for handset sales to pick up. How do you see the market prospects?
There’s no doubt the market is slow at the moment and it will take time to recover. The economy has affected almost all industries and the mobile phone business is no exception.
However, mobile phones fall under the category of basic necessity rather than luxury products. It has become a go-to product for everyone. The whole world is confined within that small machine that controls our day-to-day life on both personal and professional ends. Smartphones have become the backbone of the execution of any sort of task.
Sales of high-end smartphones might get affected for a while, but I believe this is just a phase that shall pass soon.
Digital marketing of products seems to have overtaken traditional marketing and promotion over the past 3 years in Nepal. How is Teledirect utilizing digital means to reach out to customers across the country?
Digital marketing is the most inevitable tool for marketing and promotion of anything in today’s era be it a product, service or person.
We use digital platforms most extensively for our Xiaomi brand. We have a massive number of 753K followers in December 2022 which is mostly organic, and our followers are loyal to the Xiaomi brand. We are active on all kinds of social media platforms, including google networks for the promotion of our various products and offers.
Similarly, another useful marketing tool in today’s market is influencer marketing campaigns where we collaborate with popular social media platform users to disseminate the product’s information in mass. Similarly, we are also present in major e-commerce platforms of Nepal such as Daraz and Sastodeal which also caters to our online reputation.
We also regularly create interactive contents to increase customer engagement via various offers, schemes and contests.
The tie-up with various top online platforms has been very useful for us in disseminating brand-related information.
We are sure the trend of digital marketing in 2023 will be even more diverse. Hence, we are always ready to refresh our strategy and implement updated ideas into action, and we are sure to secure increased sales, brand loyalty, and digital followings.
