Mobile phone manufacturers upset over govt’s push to export

After the government started pushing Chinese mobile phone makers to export, the manufacturers, who assemble their products here, are anxious and confused saying they are not yet ready to compete on the global arena, The Reporter has learnt.

A representative from SMADL Communications Terminal Factory PLC, told The Reporter that the government’s new move pushes plants to export mobile phone as high as 20 percent of their total production capacity. There are about nine mobile phone assembling plants in the country with the capacity of assembling 200 to 20,000 units per day.

The government said that plants should generate some five million USD from exports. That has left the assemblers in anxiety. However, mobile phone companies like TECNO Ethiopia generate USD 10 million from exports.

Companies like SMADL have found it difficult to fulfill the target saying that they have not developed a competitive advantage yet. According to SMADL, it is very difficult to export while producing mobile phones 100 percent on imported raw materials and imports. The total value addition the plants have so far stands at around 10 percent and out of that six percent is the share of TECNO Mobile alone. Thus, KENXINDA, OKIN and SMADL claim that they have done some market studies in other countries, which made them realize the lack the competitive advantages.

They claim that there has been a long-sustained shortage of hard currency which at some point makes it hard to import inputs. Air freights are relatively found to be expensive on which most of the imports and the exports are dependent. Lack of skilled manpower and the like are the other issues the firms want the government to consider before introducing tight requirements. SMADL has requested the government to look into ways on how to encourage and cultivate the upstream industry of mobile phones such as semiconductor manufacturing and mold designing.

Still, the government has made it clear that it is time to join the international market and generate foreign currency. Fite Bekele, corporate communications directorate director at the Metal Industry Development Institute (MIDI) told The Reporter that unlike steel industries, mobile phone plants are not considered as strategic sectors and for that reason both MIDI and the Ministry of Industry expects producers to gradually start exporting.

Acknowledging the challenges, the government is pushing plants to increase their capacity and get ready to face the challenges. If that fails, Fite said that the government could resort to terminating incentives and duty free privileges. He went on saying that the companies have joined the business aware of the requirements and the government’s intention to generate foreign currency.