Imports of Chinese cell phones up by 66pc in FY-11

Pakistan, where influx of Chinese goods has been witnessed after the Free Trade Agreement signed between the two countries, has imported cell phones worth $523 million during July to June (2010-2011) posting approximately 66 per cent growth over the corresponding period of financial year 2010.
Chinese companies have captured 90pc market share:
With the phenomenal increase in imports of cell phones from China, almost 90 per cent of the local mobile markets have been captured by cheaper sets made by the neighboring country, sources said. According to sources the imports of cell phones increased by 66 per cent this year as the country had imported the electronic items worth $315 million during July to June (2009-2010). The sharp increase in imports of cell phones from the neighboring country has started since private mobile companies were allowed to operate in Pakistan that has lead to an increase in consumer demand for cell phones. Since the incorporation of cell phones in the list of items for Sino-Pak free trade the penetration of cheaper smart sets in Pakistani markets has increased greatly.
130.8 per cent increase in imports:
According to sources, the fresh hike in imports has lead to a 130.80 per cent increase in imports of cell phones during the fiscal year 2009-2010 as compared to the imports during financial year 2009.
Though there are many other foreign companies manufacturing smart phones, like NOKIA, SAMSANG, Q Mobile, and others, the cheaper sets made by the Chinese companies have captured around 90 per cent share of the local market. Influx of smart sets which are also value added and comparatively better equipped, have also forced the down the prices of cell phones by other companies.
However, while the country charged Rs500 per set as duty previously, the inclusion of cell phones in the list of items for imports under the FTA is causing a huge loss in terms of custom duty.
It is pertinent to mention that the custom duty was previously Rs750 which was then reduced to Rs500 by the government.
Increase in demand of Chinese phones:
Cellular phone sets and network installation equipments are the biggest imports from China and in Category – 1 of the FTA. During 2009, Pakistan’s import of all kind of telephonic appliances including cell phones and its network installation equipment was 66.4 per cent of the total imports from China received by Pakistan.
Interestingly, the usage of Chinese smart phones has also increased due to the volatile law and order situation in big cities, especially Karachi, where mobile snatching incidents have multiplied during the last few years. According to a report, the number of complaints of cell phone snatching registered at the CPLC have also declined as people using cheaper Chinese sets mostly do not bother to register complaints.
The usage of cheaper sets have also increased due to value addition of sets possessing features like dual sim, smart color, shape, inbuilt memory, tunes and other features which are much costlier in cell phones of other international countries.
Amendment of FTA on the cards:
Though other companies are also trying to regain their market position in the country but they were continuously losing their share because of a great difference in price.
Experts in the concerned authorities were also suggesting the government to negotiate with the Chinese government for imposing a regulatory duty on important items through which the country could generate potential revenue. The imposition of duty on cell phones is not likely to affect Chinese companies as their products already enjoy a huge price difference.
However, the issue requires the approval of the Chinese government which is already in talks with Pakistan over the amendment of the existing FTA and few rounds of negotiations have already been completed while further talks are on the cards.
According to sources, with the hike in imports from China, cell phone imports from other countries like Hungary, Japan, EU states and other countries have fallen noticeably. Around two million out of the total of 11 million imported handsets are imported from these countries. Pakistan imported over nine million cell phones from China during 2009-10.