Getting Smarter with Growing Competition

  6 min 29 sec to read
 Getting Smarter with Growing Competition

A tsunami of smartphones has hit Nepal’s shores leaving consumers spoilt for choice. The deluge of new devices seems to have no end in sight and looks to be only growing.   


With the increasing demand for handsets the intense competition in the market has been unrelenting in recent years. Almost all major global and regional handset brands have entered Nepal or are preparing for it. The past nine months alone have seen a slew of internationally established smartphone brands officially launching their products one after another. 

The rising demand has led to Chinese brands such as Xiaomi, Oppo, One plus One and Meizu and ZTE along with new US brands Obi Worldphone and InFocus announcing their Nepal entry to seize the immense market opportunities here. The latest in the line are the Taiwanese handset maker HTC and India’s premium smartphone manufacturer YU Televentures. Similarly, established brands such as Samsung, Huawei, Gionee, Apple, Lenovo, Karbonn, Micromax and Panasonic along with the home-grown brand Colors are launching new products on a regular basis. 

The rising pace of imports is clearly indicative of the growing demand for the smart devices that have become an integral part of the lives of many Nepalis. As per official statistics, Nepal imported a whopping 4.99 million units of cellular devices worth Rs 18.19 billion in FY 2015/16, up by Rs 5.15 billion from Rs 13.04 billion in FY 2014/15. 

Mobile Phone Imports 

As more Nepalis gain access to cellular networks, mobile service subscriptions and the mobile penetration rate have sharply risen in the country. According to the MIS report of Nepal Telecommunications Authority (NTA), the total number of mobile service subscribers in the country has reached 29.41 million with the penetration rate increasing to a staggering 111.04 percent as of 
mid-May 2016. 

The increased spending capacity and desire for new handsets has not gone unnoticed by mobile manufacturers. “Nepali consumers have a great appetite for new technologies. Not only in urban areas, consumers in rural areas are also buying smartphones,” said one top HTC official when he was in Nepal for the launch of its phones in early October. 

Changing Trends, Mid-range Rules
One thing that is constant about the technology market is that it is constantly updating itself. Trends change quickly and the smartphone market is no exception to this. The immense market competition has led manufacturers to incorporate attractive features and build unique designs into their handsets at competitive price points to trade in on the increasing consumer demand. Falling prices have also played a major role, say some market analysts. With the decline in price levels, more people are seen switching from feature phones to smartphones. The affordability factor has enabled users in rural areas to also purchase smartphones. 

Due to the heated market competition, manufacturers are focusing on introducing feature-laden handsets mainly in the mid-range segments. The new trend in the mid-range segment includes the incorporation of hardware features like capable camera systems, above par CPUs and GPUs, higher capacity system memory and internal storage, impressive interface display, good audio quality and all sorts of connectivity options along with attractive build designs that now mostly come with a metal unibody which are pretty enough to grab the attention of Nepali gadget lovers. Similarly, the market race is also heating up in the entry and premium smartphone segments enabling buyers of lower and higher income levels to have devices of their choice. 

The New Market Kings
Around 50 different mobile brands are available in Nepal. As per the TEPC data, mobile brands from 48 different countries including China, India, South Korea, Vietnam and Hong Kong entered Nepal in FY2015/16. According to the official statistics, the largest chunk of handsets in the country comes from China. The world’s biggest mobile phone manufacturer exported 4.46 million handsets worth Rs 13.92 billion to Nepal in the last fiscal year. This is because most of the global and regional smartphone makers produce their phones in China given the various factors related to cost effectiveness compared to other countries. 

Viewed statistically, Chinese mobile phones brands have occupied the number one spot in terms of market coverage here. According to people in the mobile business, Chinese brands account for about 40 percent of the country’s overall smartphone market. Brands such as Huawei, Gionee, Xiaomi and Bird are observing brisk business in Nepal as the Chinese OEM companies have introduced their handsets across all segments at competitive price points- possibly, say market analysts, also leaving room for some of the trendiest Chinese brands such as Vivo, LeEco and Zopo to come given the lucrative market opportunities here. Similarly, handsets from Indian brands also have a significant presence in the Nepali market. Karbonn, Micromax, Spice, Lava, Intex and Xolo are some notable Indian brands that are widely sold in Nepal. 

Price vs Quality
As the market gets more crowded, handset prices are getting slashed with brands engaging in fierce competition to get a slice of the pie. Observing present trends, newly launched smartphones stay at full price for about three to four months. Then the products are offered at a lower price. Similarly, holidays and festivals lead to more price cuts and special offers in the mobile phone market. This seemingly outward market bonanza has, nevertheless, sparked debate regarding the sustainability of the market. Some see the price movements as the usual market phenomenon while others see the trend as a factor hindering the stability of the market. “The quality of the products should be the driving force of the market. I think the competition at present needs to be focused on the quality of handsets. If a company offers customers quality products at reasonable prices, then that brand is likely to be preferred,” says Anmitra Sharma, General Manager and Business Head of Meizu in Nepal. 

Controlling the ‘Grey’ Market
The illicit trade in handsets has been one of the major areas of concern for authorised mobile phone distributors in Nepal. The officially distributed brands have been forced to compete with unauthorised sets known as ‘grey’ handsets that enter the market through various malicious channels. Though there is no specific data regarding the sale of ‘grey’ phones in Nepal, it was estimated in early 2015 that illegal sales cover 30-35 percent of the country’s smartphone market causing huge losses to the government’s revenues along with threatening the stability of the market. 

The government in early 2016 announced the implementation of the Equipment Identity Registration (EIR) policy in a bid to combat the problem. The policy aims at creating a clear bridge between buyers and distributors. Under the policy, each and every tradable mobile handset must have an EIR certification tag. The policy bars handsets failing to obtain the certification to connect to mobile networks.

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