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Smartphone retailers still ‘cautious’ for any price increases in Philippines

A man takes a photo with a smartphone at a Christmas bazaar in Manila, Philippines, Dec. 7, 2020. — REUTERS

THE RECOVERY in smartphone sales in the Philippines may be affected as consumers become increasingly price sensitive amid the spike in prices of basic commodities, analysts said.

“Higher prices among commodities will cause spending to fall especially in a price sensitive market such as the Philippines,” Angela Jenny V. Medez, client devices market analyst at International Data Corp. (IDC) Philippines, told BusinessWorld in a recent e-mail interview.

Ms. Medez said smartphone vendors and retailers have been anticipating a rebound in sales this year as consumers spend more amid the looser mobility curbs. The National Capital Region and 48 other areas will remain under the most relaxed Alert Level 1 until April 15, as the number of coronavirus disease 2019 (COVID-19) cases continues to drop. 

However, she said smartphone retailers will “remain cautious for any price increase especially since everyone is still recovering from the pandemic.”

The Philippine smartphone market contracted by 5.6% to 17.8 million units in 2021, as lockdowns dampened buying activity and global supply bottlenecks restricted supply, according to the IDC.

The market research company said sales in the fourth quarter of 2021 declined by 23.3% year on year even as shipments increased by 18.4% quarter on quarter.

IDC initially expected “double-digit growth” in the smartphone market this year as global supply constraints ease.

Will Wong, client devices research manager at IDC Asia/Pacific, said the recent spike in fuel prices will have a direct impact on smartphone firms’ business operations, particularly on logistics and power consumption.

“Nevertheless, Chinese OEMs (original equipment manufacturers) have been more resilient after experiencing the COVID-19 disruptions and component shortages,” he said, adding that Chinese OEMs will be prepared to tackle any uncertainties.

Mr. Wong said it will be a reasonable move by the Chinese smartphone makers to shift some of their focus away from Russia due to uncertainty arising from the war with Ukraine.

“Nevertheless, one thing to note is that Russia’s smartphone market size is 1.7 times larger than that of the Philippines. Thus, instead of only one single market, it will be more favorable to shift the focus to the overall Asian market where the Chinese OEMs have a relatively stronger market position,” he added.

The top five smartphone brands in terms shipments to the Philippines last year were realme (3.96 million), OPPO (2.62 million), Transsion (2.47 million), Samsung (2.40 million), and vivo (2.39 million). — Arjay L. Balinbin

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