https://www.lightcastlebd.

com/insights/2019/05/02/local-manufacturing-of-smartphones-on-the-rise

Bangladesh will be one of the emerging economies to keep an eye on in the

coming years, given its remarkable track record over the last decade in
economic and social progress. What makes the economic growth in
Bangladesh even more exciting is the young population the median age is 27
years. Majority of the population will be composed of young individuals, who
will enjoy rising disposable incomes and higher standards of living as the
economy grows.

The digital ecosystem in Bangladesh is booming due to the rising income of

the millennial population and implementation of state policies that are
designed to bolster growth in the ICT sector. Internet-enabled devices such as
smartphones and laptops have gone from being luxury consumer durables to
necessities for a high percentage of the population. Young tech-savvy
individuals are integrating the internet into all aspects of their lives, from
commuting to purchasing items on e-commerce platforms. As a result, there is
a surge in demand for high-quality and affordable internet-enabled devices,
especially smartphones.

A surge in demand for affordable smartphones has unveiled local

manufacturing of such products as a lucrative business opportunity in
Bangladesh. Both government policy makers and manufacturers have
realized the attractiveness of locally manufacturing and assembling
smartphones. Trade regulations have been revised to encourage local
assembling and highly incentivize manufacturing.

Local and foreign mobile phone manufacturers are setting up or eager to set
up onshore manufacturing. The boom in onshore manufacturing and
assembling will be crucial in transforming Bangladesh into a gadget-making
hub.

As incomes rise and poverty rates drop across rural and urban areas, the
smartphone penetration rate will more than double to 75% by 2025. 40 million
phones have been imported into the country in 2018, with 30 million imported
legally and the rest through grey channels. About 8.1 million smartphones
were shipped in the same year, and one third of these smartphones was 4-G
enabled. Local manufacturing and assembling of phones will further bolster
replacement of feature phones by smartphones. Many of the locally
manufactured and assembled phones are much cheaper compared to the
imported counterparts, and therefore accessible by low-income individuals.

The rise of local manufacturing and assembling of smartphones and

subsequent availability of cheaper alternatives is reducing Bangladesh’s
dependency on imports. Imports of smartphones fell for the first time in 2018.
According to members from Bangladesh Mobile Phone Importers Association
(BMPIA), the import of low-end smartphones (below $80) declined the most in
2018. Imports of high-end smartphones (costing more than $120) increased
but were not enough to compensate for the loss in total imports. This suggests
that imposition of high taxes on imported smartphones causes a decline in the
low-end segment. Consumers of low-end smartphones can either purchase
smartphones through informal markets or switch to locally manufactured sets
once high taxes are imposed. Consumers of high-end smartphones might
choose to spend an extra amount to buy an original product imported through
a formal channel. This is an interesting phenomenon because while the
imposition of high taxes on imported handsets have led to a fall in imports, the
effect might subside in the future once incomes rise. Trade policies must
therefore be adjusted accordingly to stimulate local manufacturing without
having too much of an adverse effect on the smartphone market.

In order to leverage the rising demand for high-quality consumer durables, the
government has revised tax structures to encourage local manufacturing and
assembling of smartphones. The cumulative taxes on imported handsets
stand at 34%. Local assemblers, who follow a Semi-Knock Down (SKD)
Process, can take advantage of a 17% cumulative tax. Cumulative tax for
phones which are locally manufactured using a Complete Knock-Down (CKD)
process is the lowest at a rate of 1%. The duty structure for local
manufacturing and assembling is therefore very conducive.
 Given the economic and digital ecosystem and favorable government policy, it
is not surprising that both foreign and local electronics manufacturers have
rolled out local manufacturing of mobile phones. In 2018, 23,00,000 mobile
phones were manufactured in Bangladesh by five local and foreign
manufacturers. More foreign manufacturers have plans to set up plants in the
coming years.1 Some like Samsung assemble the phones in Bangladesh,
while others like Walton claim to manufacture every single component of the
mobile phones. Local manufacturing and assembling success stories of
brands like Walton, Symphony and Samsung have inspired others to follow.

Local Phone Manufacturing in Bangladesh

SOURCE: Bangladesh Mobile Phone Importers Association (BMPIA)

Manufacturer Capacity Smartphone Feature Assembly/Manufactured in

2018 (%) Phones (%) Bangladesh

Walton 1,100,000 30 70 Manufactured (Phones and

Chargers)
Samsung 600,000 100 (all 4G 0 Assembly (Components
enabled) manufactured in China)

Symphony 350,000 N/A N/A Assembly

Itel 300,000 33 66 Assembly

5Star Mobile 35,000 0 100 Assembly

However, potential manufacturers and assemblers must carefully design

market entry and pricing strategy. A few local brands face stiff competition
from both affordable Chinese brands and high-value brands. A common
obstacle to growth in local manufacturing/assembling is also the absence of a
robust backward linkage.

For most local manufacturers and assemblers in Bangladesh, the backward

linkage starts with importing different components of the smartphone from
China, and the method of sourcing differs by manufacturer. Fair Distribution
Ltd. assembles the Samsung phones in Bangladesh, and the different
components are selected and supplied by Samsung. Aamra imports finished
smartphones from China. Walton, which follows a CKD process for
manufacturing smartphones, imports some raw materials from China. For
most manufacturers and assemblers, the backward linkage begins in China
and is susceptible to currency volatility.

A dynamic backward linkage which commences in Bangladesh would easily

reduce dependency on imports and vulnerability to political and currency
instability. However, unlike China and Taiwan, Bangladesh lacks the
necessary technical skills for innovation in the technology sector. As a result,
manufacturing parts of the phone, such as the processor, might be too taxing
in terms of skills required.
An alternative to manufacturing high-technology components of a smartphone
might be producing low-technology parts like chargers and batteries. Walton,
for example, imports lithium-cells for batteries from China. A local lithium-ion
battery producer could supply to Walton and consumers of smartphones.
Since the market for smartphones is expanding at a robust pace, the demand
for chargers and batteries will also grow at a fast pace. Our economic
forecasts suggest that the demand for smartphone batteries will be more than
3X of that in 2018.

Therefore, while Bangladesh might not have the infrastructure and technical
skills to manufacture high-technology component parts, it has a lucrative
landscape to produce low-technology components such as chargers and
batteries. The smartphone manufacturing and assembling industry is making
its mark as a rewarding line of business in Bangladesh. The country should
derive inspiration from the manufacturing practices of countries such as
Vietnam and Malaysia to support onshore manufacturing. According to many
local manufacturers, improvements in infrastructure, such as construction of
separate lanes from the airport to economic zones, would be highly desirable.
Key players in the industry should also closely monitor the US-China trade
war. As the relationship between the two countries continue to stay tense,
companies such as Foxconn will consider opening factories in countries such
as Vietnam.2 Manufacturers and policy makers in Bangladesh should attempt
to take advantage of this situation and attract companies to Bangladesh. The
smartphone market in Bangladesh will grow in both volume and value, and the
government needs to carefully implement policy to utilize the growth in
consumption and leverage opportunities in the international trade.

This article was written by Farah Hamud Khan, a Business Consultant at

LightCastle Partners. For any queries, she can be reached
at farah.khan@lightcastlebd.com. This has been published as part of
LightCastle’s 6th year anniversary publication, “LightCastle Featured Insights
2019“.
Mobile Market in Bangladesh 2019 | Infographic
https://blog.bikroy.com/mobile-market-in-bangladesh-2019-infographic/

July 10, 2019Have you ever left the house and suddenly realized that you’ve forgotten something? You
fumble through your bag and your pockets, but you just can’t seem to find it anywhere. And in that
moment, it’s almost as if your life is incomplete without it. Indeed, without our mighty mobile phones,
we might as well be disconnected from reality itself. The power of global communications technology is
now pretty much at everyone’s fingertips, which essentially makes us slaves to these little devices. So
many aspects of our everyday life now depends on mobile technology – trade and commerce, education,
food, transport, healthcare, entertainment. It’s interesting to speculate the changes that have occurred in
the mobile phone market due to this paradigm shift. Customers seem to want something new and
different from their phones each year. Here, we will analyze and evaluate some aspects of these
trends in the mobile market in Bangladesh, based on Bikroy user data in 2019.
What users are searching for

A quick glance at our search data indicates that Xiaomi is currently the most sought-after brand. Xiaomi
has recently grown quite popular in the market for providing relatively cheap phones with great
specifications, especially the Redmi series. Ideally, someone on a budget could get great use out of these
phones for about 4 to 5 years. These Chinese phones come in a variety of model types, camera options,
color choices and with somewhat good gaming software, and thus can appeal to a large segment of the
market. After Xiaomi, the most searched phones are Samsung and iPhone. Although these are generally
on the pricier side, Samsung has a large array of reasonably priced phones with good specifications as
well. And of course, some hardcore loyal customers will bank their money on Apple any day. The iPhone
is massively popular in Bangladesh due to its superb camera specifications and its overall premium feel.
Then comes Nokia, Huawei, Vivo and Oppo. Search for these are quite strong but still comparatively
lower than the brands mentioned earlier. Even though Nokia has been revamped and reintroduced as a
smartphone after a long absence, it is not nearly as popular as its heyday when it used to rule the
feature-phone market.

Where most phones are being sold

Next we look at the geographical location from which the ads for mobile phones are being generated.
The data indicates that more than half of the listings come from Dhaka. As the capital city and a hub of
communication, business and education, it’s only natural that more people are buying and selling mobile
phones here than anywhere else in the country. Chattogram is the next major city where mobile phones
are being sold, holding about a tenth of the listings on Bikroy.

What are the top brands on Bikroy

Samsung reigns as the most bought and sold mobile phone on site, followed by Symphony, Xiaomi, Apple
and Nokia. Samsung has been around for a while and has consistently delivered high quality phones to
ensure its loyal customer base. Nonetheless, the market is dynamic, with brands like Xiaomi and
Symphony allowing users to find cheaper alternatives to Samsung. Meanwhile, Apple and Nokia are
slightly lagging behind due to their buyers being more concentrated in certain areas, though they are
expected to get a boost this year after the introduction of their new flagship phones.

Android vs iOS vs Feature

Today, most phones run on either the Android or iOS platform. Android rules the mobile market in
Bangladesh by a wide margin (70%) because it allows endless customization and is supported by the
majority of mobile phone manufacturers, making it the dominant standard in the mobile phone industry
worldwide. The Android vs iOS format war in our time is reminiscent of the Windows vs Mac format war
of the early 90s. Apple is well known for their “closed systems” that fuse hardware and software
together to create a unique experience which many loyal users love, but also a rigid combination which
many tech enthusiasts reject due to lack of flexibility. Nevertheless, the iOS brings a healthy 10 percent
share of the platform to a single brand, which is great for Apple. And while some may guess that feature
phone platforms are going out of in the industry by now, looks like they will still be around for some
time, being a great low-cost alternative to smartphones.
Mobiles by Price Range

As the data suggests, the majority of phones available on Bikroy are below the 5,000 BDT price point. A
large number of phones are also being listed between 10,000 and 2,000 BDT. The reason why cheaper
phones are seen to have the larger share of ads on Bikroy is that many used phones tend to have a low
resale value. It could also be due to the fact that more brands are introducing budget phones lately.
Today, the most basic features of a mobile phone are more or less the same across brands. Users choose
their phones based on design and higher level specifications coupled with perceived brand value. This
has created a considerable degree of price diversity in the mobile phone industry.

New phones vs Used phones

According to recent data, each month up to 150,000 mobile phones are available on Bikroy. Despite
fluctuations, there has been an overall increase in the number of mobiles sold during the first half of
2019. The increase may be caused by more attractive listings and also online platforms gaining
popularity. It’s also interesting to note that even though the Bikroy inventory is dominated by used
mobile phone listings, ads for brand new phones are on the rise and growing at about 20 percent faster.

Conclusion

So that was a snapshot of the market for mobile phones in our country in 2019. As usual, the market is
evolving constantly with rapid technological change. Consumers are getting better and better offers with
every passing year, and the market seems likely to see a rise in cheaper and affordable phones while
keeping big brands at bay. The more expensive and high end brands will most likely tend to their niche
audience while some will try to dabble into the budget phone arena. In any case, the market is growing
faster and it is now easier than ever to buy a mobile phone online, thanks to platforms such as Bikroy. So
if you are looking for a mobile phone, check out Bikroy.com for great deals on phones today!
Smartphone sales rebound
https://www.thedailystar.net/business/news/bangladesh-made-smartphone-sales-rise-1753246

Smartphone sales rebound

Enhanced monitoring has made it tougher to bring in devices through illegal channels. Photo: Reuters/file

Muhammad Zahidul Islam

Smartphone sales bounced back from a year-long rough patch in the first quarter of 2019
helped by a fall in prices of handsets after the beginning of local assembling in Bangladesh.

Sales rose 19 percent to 20.5 lakh pieces in the January to March period, according to
Bangladesh Mobile Phone Importers Association (BMPIA). However, the total sales of
handsets declined about 1 percent to 68.67 lakh units.

Rezwanul Haque, chief executive officer of Transsion Bangladesh, a renowned Chinese

brand that assembles handsets in the country, said 2018 was a bad year for the industry as
sales dropped in almost every quarter after the government raised taxes on imports.
“The situation is changing and the second quarter will be much better than the first one,”
he said.

Leading businesses say as the sales of basic and feature phones have dropped rapidly, it
has affected the total sales. Enhanced monitoring has also made it tougher to bring in
devices through illegal channels.

Currently, there are five local and international brands that are assembling smart devices
in the country. The local assembly now accounts for about 13 percent of the total device
consumption.

The assemblers will be able to meet a third of the country’s demand for handsets at the end
of the year, said Mohammad Mesbah Uddin, chief marketing officer of Fair Electronics,
which assembles handsets of Samsung in its plant in Narsingdi.

“From Samsung’s point of view, we are happy with our assembling growth but the overall
industry has not kept pace with us,” said Mesbah, also the joint secretary of the BMPIA.

He says still there is huge potential in the market, but the business volume is not growing
as expected.

“Maybe, the network quality of mobile phone operators is an issue. If people do not get
expected speed on their device, what will they do with smart devices?”

Smartphones account for 30 percent of the handset sales, up from 23.8 percent in the first
quarter of 2018.

Haque says if the government gives some incentives, it will help the industry grow the
market further.

Transsion’s plant in Gazipur assembles 3.5 lakh units of handsets a month, the highest
among the assemblers.

According to the BMPIA, 3.07 crore handsets worth Tk 9,000 crore were sold in Bangladesh
last year.
Market share of mobile operating systems in Bangladesh from January 2016 to April
2019, by month*
https://www.statista.com/statistics/528256/mobile-operating-system-share-in-pakistan/

The statistic shows the market share of mobile operating systems in Bangladesh from January 2016 to
April 2019. In April 2019, Android held a share of 96.69 percent of the mobile operating system market
in Bangladesh.
Mobile Vendor Market Share Bangladesh
https://gs.statcounter.com/vendor-market-share/mobile/bangladesh
Smartphone Market in Bangladesh Grew
45% YoY in Q1 2019
https://www.counterpointresearch.com/smartphone-market-bangladesh-grew-45-yoy-q1-2019/

MAY 30, 2019

|IN PRESS RELEASE

|BY ABHISHEK CHOUDHARY

Samsung took the first position from Symphony in Bangladesh smartphone market, grabbing a
22% market share.

LTE capable smartphones grew 117% YoY during Q1 2019.

Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego

May 30th, 2019

The smartphone market in Bangladesh grew 45% year-on-year (YoY) during Q1 2019,
according to the latest research from Counterpoint’s Market Monitor Service. This was due to
the increase in the availability of locally manufactured devices. The volume of locally
manufactured devices increased by 29% quarter-on-quarter (QoQ), and they now make up for
41% of Bangladesh’s smartphone market.

Commenting on the performance of various brands, Karn Chauhan, Research Analyst at

Counterpoint Research, said, “Local brands in Bangladesh had a 39% market share in Q1
2019. Among the local brands, Maximus showed a huge growth of 793% YoY, driven by its
affordable offerings in the US$25-US$75 price band. Maximus D7 was the second best selling
model in Q1 2019, after Samsung Galaxy J2 Core. On the other hand, Chinese brands grew 38%
YoY, grabbing a 33% market share, which was largely driven by the growth of Huawei, Xiaomi,
OPPO, and vivo, which contributed to 65% of the overall shipments of Chinese brands.”

Commenting on Bangladesh market, Abhishek Choudhary, Research Associate at

Counterpoint Research, said, “Locally made handsets are proving to be a success. Prices of
locally assembled devices are lower than that of the imported ones. Also, the defect ratio of the
latest locally manufactured devices has also come down sharply in comparison to the earlier
ones. Clearly, the government’s efforts to promote local manufacturing has been successful. In a
highly competitive market, locally made handsets are giving stiff competition to imports.”

In terms of brands, Samsung was the clear leader. Samsung’s shipments grew 203% YoY,
helping it capture the top spot for the first time in Bangladesh. It’s market share stood at 22%,
while the former market leader, Symphony only had a 16% market share. Symphony, the
former market leader, is now the second best selling smartphone brand in Bangladesh. New
launches and boost in the local manufacturing were the reason behind Samsung’s growth. The
Samsung Galaxy J2 Core was its top model. Expanding its portfolio also helped Samsung, as the
newly introduced A-series smartphones dominated their respective price bands.

Transsion did well driven by strong shipments of iTel in sub $75 segment.A33 Android Go
edition remained popular. As it scales up its local assembling, Transsion is looking forward to
grow its market share with multiple brand strategy (iTel, Tecno and Infinix)

Xiaomi’s smartphone shipments grew 165% YoY. The brand had a 7% market share and was
among the top five smartphone brands during Q1 2019. vivo grew at a stunning 1,133% YoY
with new launches such as Y91C, Y91i. Huawei witnessed a resurgence in shipments, which
grew 7% QoQ due to its Y series models. Huawei also offered discounts to customers
purchasing handsets from Huawei-authorized outlets. Customers buying smartphones from
Robishop (an e-commerce platform from Telecom Operator Robi Axiata Limited) could also get
the Robi and Airtel bundle.

Even the local brands of Bangladesh had a strong performance during Q1 2019. Symphony,
Walton and Maximus were part of the top five local smartphone brands by market share.

With the advent of 4G services, shipments of LTE capable smartphones grew 117% YoY. The
availability of LTE capable smartphones is constantly increasing. Samsung alone contributed to
34% of the total LTE capable device shipments, followed by Xiaomi with an 11% share.

In terms of system-on-a-chip (SoC) vendors, MediaTek is the leader with a 54% market share,
followed by Qualcomm at 15%. Qualcomm powered smartphone shipments grew 116% YoY,
 largely driven by Samsung, Xiaomi, OPPO, vivo, and Huawei. Samsung contributed 36% of
shipments of Qualcomm powered chipsets, followed by Xiaomi, which contributed 33%.

Exhibit 1: Bangladesh Smartphone Market Share – Q1 2019

Source: Counterpoint Research Market Monitor

Market summary:
 Symphony ranked second in the market share rankings, with a decline in sales of best-selling
V98. Shipments declined 19% QoQ but registered 2% YoY growth.
 The US$75-US$100 price band grew 74% QoQ, driven by the Samsung Galaxy J2 Core.
 Shipments of phones with a primary camera of 15.00-19.99 megapixel (MP) grew 203% QoQ,
driven by Samsung’s models. Samsung Galaxy A30 grabbed a 79% shipment share in this
segment.
 Shipments of devices with a RAM ≥4GB grew 76% QoQ. This was driven by Samsung, which
contributed 62% of the shipments in this segment.
 Shipments of devices with 64GB internal memory grew 90% QoQ and 197% YoY, driven by
Samsung models.
 Shipments of devices with 4001-5000 mAh battery capacity grew 88% QoQ, driven by vivo,
OPPO, and Samsung.

Please feel free to contact us at press(at)counterpointresearch.com for further questions

regarding our in-depth latest research, insights or press inquiries.
Mobile Phone subscribers
http://www.btrc.gov.bd/content/mobile-phone-subscribers-bangladesh-october-2019

The total number of Mobile Phone subscribers has reached 164.170 Million at the end of October, 2019
The Mobile Phone subscribers are shown below:

OPERATOR SUBSCRIBER (IN MILLIONS)

Grameen Phone Ltd. (GP) 76.067

Robi Axiata Limited (Robi) 48.349

Banglalink Digital Communications Limited 35.049

Teletalk Bangladesh Ltd. (Teletalk) 4.706

Total 164.170

*Subscriber means the biometric verified subscribers/subscriptions who have any activity (voice, data,
sms etc.) at least once in the preceding 90 days.
For the Month Of:
October, 2019