La Lista Blanca: What LatAm’s new import laws mean for the smartphone market
Mobile Communications

La Lista Blanca: What LatAm’s new import laws mean for the smartphone market

Black market traders are far from a new phenomenon. For years, they’ve sold products and services that haven’t been regulated properly, that may be stolen, or that may infringe on copyrights. They’re not just a huge problem for legally trading businesses, but also for the regulators and governments trying to combat them.

Within the past few years, a smartphone black market has emerged. Here, dodgy traders are illegally importing and selling stolen and unregulated handsets all over the world. Amidst a growing smartphone market, Latin America in particular, has become a hotspot for illegal smartphone sales. One of the drivers of this activity is the rise of import tariffs in countries such as Argentina and Brazil.

Essentially, some traders aren’t keen to pay hefty taxes to import devices into countries and are instead selling to consumers directly in black market environments. And, similarly, consumers aren’t willing to hand over huge sums of money for branded handsets. However, regulators in Argentina and Brazil have been quick to counter illegal smartphone sales. Last year, the Argentinian communication watchdog - called the Ente Nacional de Comunicaciones - said it would implement new laws to block illegal smartphone imports.

The project, known by many as La Lista Blanca, aims to intercept devices that have been imported mainly from neighboring countries such as Chile and Uruguay. Then, in February, Brazil followed suit when its communications regulator - Anatel - announced a project called Celular Legal”, which will see regulators block devices that haven’t been vetted properly. The question is, what do these changes mean for the region’s smartphone market?

 

Strict regulations

Despite the fact that South America is home to some of the world’s poorest countries, it contains a large smartphone market. Research from GSMA claims that there were 690 million mobile connections in the continent last year. And according to the same report, Brazil has the largest amount of connections, at 234 million, followed by Mexico with 108 million and Argentina with 63 million. These new regulations are aimed at preserving the market.

They will not only have an impact on the Argentine and Brazilian smartphone markets but will also transform the way devices are shipped around the wider region. In Argentina, companies will need to show that handsets have proof of purchase and pay 50 per cent of import tax for devices that cost more than $300. Meanwhile, companies importing mobile devices to Brazil will have to comply with tough homologation and approval processes. That could potentially delay shipments, resulting in financial loss.

Handsets that made their way into Argentina before the implementation date won’t be affected by the law. But if a someone in Brazil is using an illegally imported phone and changes their mobile number, they could be penalized by these changes. Brazilians who acquire an unapproved device after the implementation deadline will receive a text message from Anatel notifying them that their device will be blacklisted within 75 days. Argentina is thought to be working on a similar system but hasn’t made any details official yet.

In theory, Argentina wants to implement a system that logs stolen devices and blocks handsets which have not been approved prior to arriving in the country. For a few years, its government has maintained a limited blacklist, but this only contains the IMEI number of every device. Under new plans, foreign manufacturer and operator information will be added to the list.

Rio has been working on similar plans to reduce smartphone theft. By February 2019, the Brazilian Government wants to ban knock-off handsets that are made in countries such as China and contain fake serial numbers. In the future, consumers will also be able to check if IMEIs are valid by accessing the Anatel website.

 

Impact on business

Mobile technology is a big wealth driver for South America, with research from Statistica estimating that the industry generated over $36 billion in 2017. These laws will largely be a positive step for major smartphone brands such as Samsung, Motorola and Apple, which have been widely affected by smuggling over the years. Analysis firm Counterpoint claims that they have seen underperforming sales since 2014, leading some of them to lobby regulators for better protection.

Although technology giants will be able to operate in South America without the fear of losing money to black market traders, the restrictions could be bad news for countries whose smartphone markets haven’t been approved by Argentinian and Brazilian regulators. For example, it’s estimated that up to 70 per cent of illegal smartphone shipments in Brazil come from Paraguay. But because most of these firms haven’t been vetted by Anatel, sales could drop by between 20 to 40 per cent.  In Argentina, most illegal imports come from Chile, meaning its smartphone market could also decrease.

In most cases, regulated smartphones are more expensive than those illegally imported, which is the main reason why people have been purchasing devices from the black market. However, while these laws will lower the number of illegal imports entering Argentina and Brazil, that doesn’t necessarily mean major brands will see increased sales. It’s likely that many consumers will simply keep using older devices, and the second-hand market could increase as well. So perhaps, then, these regulations will prove to be a wasted effort.

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Nicholas Fearn

Nicholas is a technology journalist from the Welsh valleys. He's written for a plethora of respected media sources, including The Next Web, Techradar, Gizmodo, Lifehacker, TrustedReviews, Alphr, TechWeekEurope and Mail Online, and edits Wales's leading tech publication. When he's not geeking out over Game of Thrones, he's investigating ways tech can change our lives in many different ways.

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