DHAKA, Bangladesh — Nokia, Samsung, Vivo, and other international mobile phone brands are increasingly choosing to establish manufacturing operations in Bangladesh to avoid the country’s high import tariffs and gain direct access to its vast and rising population. Bangladesh, formerly a regular bottom-dweller in global league tables, has gotten a lot of attention in recent years as its economy has grown rapidly and consumer buying power in the 163 million-strong country has increased. Through its “Made in Bangladesh” campaign, it has pushed phone manufacturers to enter the nation by raising tariffs on imported handsets, collecting lesser charges on component imports, and exempting consumer sales from the country’s value-added tax. Nokia is the latest company to follow in the footsteps of Samsung in South Korea and China’s Oppo, Vivo, Transsion, and Realme in adopting a strategy previously reserved for larger markets like India and Brazil. Other Chinese brands are expected to follow suit, according to Bangladeshi officials. Domestic manufacture has risen, accounting for approximately 80% of sales, thanks to an effective price gap of 15-26 percent between imported and locally assembled cellphones. Finance Minister A.H.M. Mustafa Kamal proposed last month to prolong the VAT exemption for another two years, citing the increased predominance of local phones. Another regulation, slated to take effect on July 1, will prevent smuggled phone purchasers from registering their handsets with local networks. “That will stop unlawful handset imports into Bangladesh,” Shahidul Alam, director general of the Bangladesh Telecommunication Regulatory Commission, told Nikkei Asia. “Local manufacturers will be encouraged, since their market shares will increase.”
In recent years, Bangladesh’s economy has been rapidly expanding. Associated Press
Local phone manufacturing began in October 2017, when local electronics manufacturer Walton launched its own brand in a Dhaka suburb. Since then, it has produced 1.7 million smartphones and 4.3 million feature phones. A number of additional local companies are currently producing smartphones in Bangladesh, many of which are subsidiaries of major conglomerates. However, Vivo and Realme, both owned by China’s BBK Electronics, as well as Transsion, have established their own manufacturing in the country. Since launching its local factory in 2019, Reasat Ahmed, assistant manager for Vivo subsidiary Haicheng Mobile Co. (BD), stated the company has gained “significant” market share by making “global technology much more cheap for local consumers.” A local spokesman for Realme said his company is now one of Bangladesh’s top three smartphone brands, with a 14 percent market share, citing figures from research firm Canalys. “We can now sell our products to smartphone consumers at a much more affordable pricing,” he added, adding that the company’s plant in Gazipur currently employs 600 people. “In Bangladesh, we are experiencing fantastic growth.” As local companies begin to produce motherboards, batteries, chargers, and other components, Rezwanul Hoque, the chief executive of Transsion’s local unit, hopes to be able to drop phone prices even further in the future. The trend is well-received by consumers. “We are now utilizing handsets that are “Made in Bangladesh.” We’re quite pleased of it “According to Atiqur Rahman, a private banker, smartphone prices should continue to fall so that those with lower incomes may also get high-quality devices. Bangladesh’s economy has been constantly rising, prompting the rush to build phones. Gross domestic product had been growing at over 7% yearly for several years prior to the pandemic, and according to the finance minister, GDP increased by 5.2 percent in the fiscal year ending June 30, 2020. It was the strongest in Asia, although being lower than before, he said.
On October 2, 2020, Bangladeshis can be seen outside the Bashundhara City Shopping Complex in Dhaka. Smartphones are more cheap to consumers when they are manufactured in the country. EPA/Jiji/Jiji/Jiji/Jiji/Jiji/Jiji/ The government has $45 billion in foreign exchange reserves, enough to cover six months’ worth of imports, and over $21 billion in remittances from residents working abroad were received last fiscal year, a figure the finance minister expects to reach $25 billion by the end of June. In addition, the country boasts over $40 billion in annual merchandise exports. According to the Bangladesh Telecommunication Regulatory Commission, Bangladesh’s 175.27 million active mobile phone accounts at the end of May — comfortably within the top ten in Asia in terms of size — make the country a crucial attraction for companies. According to Mohammed Asif Alamgir, business controller of the group’s mobile division, Union Group, the local conglomerate that will build Nokia phones under contract with Espoo, Finland-based brand owner HMD Global, the company plans to start producing 500,000 smartphones per month soon. “Compared to Chinese manufacturers, Nokia is a very old and trusted brand,” he remarked. “No one will be able to match the brand acceptance of Nokia.” “Consumers will be able to acquire their [be]loved brand Nokia handsets at a reasonable price,” said Takayuki Omino, a representative for HMD Global. Xiaomi and Motorola, which is now part of China’s Lenovo, are also working on plans for local production, according to a Ministry of Posts, Telecommunications, and Information Technology official. Lenovo spokeswoman Genevieve Hilton, on the other hand, refuted this, while Xiaomi did not react to questions. Beyond the home market, the country’s cellphone manufacturers are beginning to think about exporting. According to Uday Hakim, executive director of Walton Hi-Tech Industries, Walton has begun assembling phones for a foreign brand for export, with the first shipment arriving in the United States in March. According to him, Walton also exported handsets to Nepal under its own brand, though shipments have since been halted due to the pandemic. Fair Group, the local corporation that manufactures Samsung phones, has its sights set on international markets as well. “Bangladesh handset exports are expected to begin in 2023 or 2024,” stated Chief Marketing Officer Mohammed Mesbah Uddin. “Almost all of the major companies have either received authorization or are in the process of setting up factories here,” he said, estimating that 95 percent of cellphones for the domestic market will be made locally once that happens. Another local business, Edison Group, produces phones under the Symphony brand. “We want to make Bangladesh a regional powerhouse for mobile handset manufacture,” Managing Director Jakaria Shahid told Nikkei, predicting that sector exports will go up next year. Continue reading
