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Global economy loses $6b annually to counterfeit mobile phones

By BusinessNews Staff on February 9, 2014

While the global economy loses about $6 billion annually to the menace of counterfeit phones coming through the grey market, according to latest Mobile Manufacturers Forum, (MMF), report, Samsung Electronics has said that it would deepen partnership with the relevant authorities and vendors in Nigeria to tackle influx of fake phones.

The new report by MMF showed that in 2013, no fewer than 148 million counterfeit mobile devices were sold through visible retail sites, with many more expected to be sold in unofficial retail outlets, online auction websites and in local black markets worldwide.

A grey market is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer.

The most common type of grey market is the sale of imported goods brought by small import companies or individuals not authorized by the manufacturer.

The MMF is an international non-profit organisation founded in 1998 by a number of leading manufacturers of mobile radio equipment, including leading ones like Nokia, Samsung, Apple, as well as network suppliers like Ericsson, Nokia Siemens Networks and Alcatel-Lucent, among others.

It would be recalled that the Compliance Monitoring and Enforcement Department of the Nigerian Communications Commission (NCC), had earlier played host recently to the Director, Europe, Middle East and Africa, of Mobile Manufacturers Forum (MMF), Mr. Thomas Barmuller, for bilateral discussions with the regulator on reassuring the Nigerian telecom consumer of their safety from electromagnetic field (EMF).

The MMF report informed that lab tests on more than 50 counterfeit devices found that most failed basic compliance tests against industry standards for network connectivity, which translated into a very high percentage of call dropouts for users.

According to the report, network coverage was significantly reduced as more substandard devices connected to the network, which created coverage blackspots that could only be fixed by installing 80 per cent more base stations.

The report, according to MMF Secretary General, Micheal Milligan in Brussels, Belgium, “with the average knock-off phone selling for around $45, our conservative estimate of $6 billion in illegal sales represents a massive financial loss for governments and the mobile phone industry.

“Governments can combat the growing counterfeit phone problem with new technology which
can identify substandard devices on the mobile network and permanently block users who don’t change to a genuine product.”

In India alone, the MMF claims that counterfeits make up more than 20% of the cellphone market, causing US$1.5 billion annually in lost sales, $85 million direct tax losses and $460 million indirect tax losses. “Counterfeit phones are made with cheap sub-standard materials and have been shown to contain dangerous levels of metals and chemicals like Lead,” Mr. Milligan said.

Although counterfeit mobile phone is a global issue causing economic damages to equipment manufacturers, the Director, Hand Held Product, Samsung Electronics West Africa, Emmanouil Revmatas who spoke to the Nigerian IT Journalists at the just concluded Samsung Forum held in Malaga, Spain assured that they were working with government to clean the market with substandard mobile phones which cut across all brands of phone.

Even though he did not give precise figure on the Nigerian market, he said that the impact of grey market is significant in Nigeria, adding that relevant authorities must join hands to address the ugly trend.

At the forum that showed latest Samsung products available in the global IT market, he said that,
“We will continue to educate the consumers on original Samsung phones. We have engaged the government. We are working with the Nigerian Communications Commission. Our products are type-approved. Samsung is very active in Nigeria. We are active in Corporate Social Responsibility. Samsung products have continued to do well in Nigeria and other markets around the world. Our products have continued to be the toast of consumers”

At the 5th Samsung African forum that attracted Samsung’s African vendors including Nigeria, he said that Samsung has been very active in Nigeria, creating awareness and educating the consumers on how they can get original products.

“We have engaged the ministry of Communications Technology, the NCC and we will deepen partnership with them to clean the market. The most important thing is that we have been informing our customers on how to identify original products. This we do through education and awareness. We do this through consumer forums to protect the brand. Education and government effort are more needed to stem the tide” he said.

Speaking to one of the Samsung’s vendors at the forum that was well attended , the Chief Executive Officer of Dallas Communications Nigeria, Emeka Uyaelumuo, admitted that fake phones are not limited to only Nigeria market.

While calling on the relevant authorities to join hands in the clean up exercise, he advised end users to always buy phones from authorized Samsung dealers in the Nigerian IT market which he said is the largest in Africa.

“Computer Village is a big market. It has given jobs to millions of Nigerian. Many authorized dealers are in Computer Village where consumers can buy good phones. Dallas Communication has maintained good name in original phones.

Before now, the Nigerian regulatory , the Nigerian Communications Commission, NCC, in partnership with the Nigerian Customs Service and Phone Dealers Association of Nigeria had last year in Lagos organized a one day forum to sensitize end users again on the dangers of buying fake phones coming through grey market.

[Vanguard]

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