Sales of smuggled cell phones jumped 77% in Brazil in 2023, going from 3.5 million units in 2022 to 6.2 million last year, according to research released this week by the Electrical and Electronic Industry Association (Abinee). Irregular devices represented 8% of total market sales at the end of 2022, jumping to 25% at the end of 2023, which was considered worrying.
“The number of cell phones that have entered Brazil via smuggling is increasing. The numbers are frightening”, said the president of Abinee, Humberto Barbato, during a press interview. At this rate, irregular cell phones could reach a 30% share of sales in the first half of the year, he warned.
The explosion in the consumption of smuggled devices is related to the ease of finding them in marketplaces, sites that group their own and third-party offers. Abinee estimates that 90% of the sale of smuggled smartphones occurs via marketplaces. Another point is the attractive price, as it costs around 38% less than a regularized device.
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The association’s president avoided naming names, but said that all major e-commerce sites allow this practice. Until the previous year, the situation was more restricted to a few sites due to pressure from the industry and authorities. In the following months, however, the other sites realized that they were losing sales and decided to “turn a blind eye” to this practice, according to Barbato.
“Several marketplaces they began selling non-approved products again. Today, we are avoiding mentioning names because, unfortunately, it is a widespread thing. They lost business and saw nothing effective in hindering sales of irregular products,” he said. Abinee’s representative demanded effective measures to hold those responsible marketplaces.
The main origin of smuggled devices is Paraguay, according to Abinee. “The number of cell phones that Paraguay imported last year is disproportionate to its population”, emphasized Barbato. There were 16.7 million devices imported into the neighboring country, while the Paraguayan population is only 6.7 million, which highlights the redistribution to other countries, mainly Brazil.
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“Border inspection is not enough to curb this very serious problem”, warned the president of Abinee. “When you see news about the seizure of cargo with a thousand devices, it is just a drop in the ocean”, he compared.
Xiaomi smartphones were identified by the association as the most smuggled. More recently, the Oppo and Realme brands have also been spreading irregularly across the market.
Scratchs
The main problem with devices that enter the country irregularly is that they do not have certification from the National Telecommunications Agency (Anatel), and may not work correctly on Brazilian frequencies for 4G and 5G signals.
Furthermore, they do not have a manufacturer’s warranty, do not have official technical assistance and do not meet electrical safety requirements – which often leads to accidents, especially with non-standard power chargers.
In turn, there is a loss of federal tax collection in the order of R$4 billion (considering the sale of 6.2 million devices), according to Abinee’s calculation. The bill does not consider state taxes, such as ICMS.
There is also fear of job cuts in Brazil and, ultimately, the closure of local factories. The president of the association explained that in the last two years there were around 9.7 million irregular devices sold here and that they were no longer produced by local manufacturers.
“If it is producing less than expected, it tends to reduce staff, operating hours and others”, he warned, pointing out that this could have an impact on a chain that has 10 thousand direct and indirect jobs.
(With information from Estadão Conteúdo)
