The trade in illegal cell phones is about to reach a disconcerting record in Brazil, representing a significant share of 21% of the market in the last quarter of this year.
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Learn more about the Irregular Cell Phone
This projection, which exceeds the 17% of the previous period, was revealed by estimates from the Brazilian Association of the Electrical and Electronic Industry (Abinee) in conjunction with the consultancy IDC.
- Sales of illegal cell phones reach an alarming level, surpassing 21% of the market.
- Xiaomi holds around 80% of share in this niche, as revealed by data from Abinee.
- Illicit products arrive in the country through obscure routes, impacting prices and taxes.
The rise of this unofficial market indicates a considerable leap, going from 4 million units in 2022 to 5.5 million this year. Among the main suppliers, Xiaomi stands out with approximately 80% of market share in this segment. Its products arrive in Brazil after being imported from China to Paraguay, and are then distributed clandestinely in the country.
These alarming numbers were revealed during a meeting for Abinee's end-of-year balance sheet, which took place this Thursday (07). Despite being considered worrying, the entity did not announce concrete measures to contain the advance of irregular devices.
Modus Operandi of Crime
The process behind this illegal trade reveals a complex logistical operation on the border between Brazil and Paraguay. Products, especially the Redmi Note 12, are transported in small quantities by motorcycle couriers, making them difficult to detect during customs inspection.
These devices are then sold on marketplaces at prices ranging from 40% to 50% lower than those charged for regular smartphones. The difference in prices is related to the lack of Anatel certification, the lack of a charger within national standards and the lack of collection of due taxes.
Expansion of the Irregular Market
In addition to Xiaomi's strong presence, Realme's irregular cell phone trade is also gaining ground in the country, following a model similar to that of the Chinese brand.
Xiaomi encouraged users to purchase its devices through official channels, ensuring benefits such as warranty period, service coverage and product authenticity. The brand highlighted the presence of its stores in several Brazilian cities, as well as the network of partners spread throughout the country.
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Irregular Growth vs. Regular Market Stagnation
The numbers revealed by Abinee and IDC point to significant growth in sales of irregular devices, jumping from 880 thousand units in the first quarter to 2.05 million in the last period analyzed.
In contrast, the regular market showed stagnation, remaining at around 7.6 million units sold in the fourth quarter, according to estimates.
Billion Dollar Economic Impact
Luiz Carneiro, director of government relations at Abinee, estimates that illegal cell phones generated an economic impact of R$2.1 billion in the first half of the year alone, mainly due to tax evasion, highlighting the almost non-existent collection of taxes. The entity did not release consolidated figures for the entire year, but highlighted the loss of R$209 million in research and development (R&D).
Overall Result
First of all, and despite expectations, the performance of the electrical and electronic products industry in 2023 was still below expectations, attributed to economic uncertainties, credit restrictions, household debt and default, according to the sector association.
Namely: overall revenues fell by 6%, from R$218.2 billion in 2022 to R$204.3 billion in 2023. In the telecommunications segment, the reduction was even more significant, reaching 21%, especially due to the drop of 26% in the mobile phone market.
Indeed, through this worrying data, the challenge of containing the advance of illegal cell phone trade becomes evident, a problem that impacts not only the market, but also the national economy as a whole.
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