Cellular phone sales start recovery

Cellular phone sales start recovery

JAKARTA (JP): Sales of cellular telephones have started to
bounce back after suffering a sharp drop last year, according to
the Association of Cellular Telephone Dealers.

The association's chairman, Alie Cendrawan, said on Friday
that the monthly sales of cellular phones in the country
increased to between 30,000 and 50,000 units during the first six
months of this year from an average of 15,000 units last year.

"We expect nationwide sales will rise or at least stay at
about 40,000 to 50,000 phones per month until the end of the
year," he told The Jakarta Post.

He said the figure included sales made by nonauthorized
dealers, who directly imported the products and sold them often
at lower prices.

The steady increase in sales was due to the strengthening
trend of the rupiah to the U.S. dollar and that the phones had
become more of an utility item rather than for social status, he
said.

The rupiah, which was about Rp 2,500 to the dollar before the
crisis hit the country in late 1997, touched its lowest level of
Rp 17,000 in January 1998, due to a deterioration of foreign
investors' confidence in the country's economy. The rupiah has
continued strengthening since then and reached between Rp 9,000
and Rp 10,000 in late 1998 before stabilizing to below Rp 7,000
in the last few months.

The stronger rupiah has significantly cut prices of imported
products, including cellular phones.

Alie said monthly sales of cellular phones dropped to about
15,000 units when the rupiah experienced its weak performance
during the crisis, far below the precrisis level of 40,000 units.

The improving sales, however, did not necessarily yield more
profit to cellular phone traders, he said.

"On the contrary, cellular phone traders and dealers,
especially the nonauthorized ones, receive less profit than they
used to have last year," he said.

Cellular phone traders now received only a margin between Rp
5,000 and Rp 25,000 per phone sold, compared to about Rp 100,000
in 1997 and 1998, he said.

A nonauthorized cellular phone dealer in Roxy, a business area
in West Jakarta which claims to be one of the largest cellular
markets in Southeast Asia, said traders now tended to sell the
phones at a low price even with a small margin.

"They don't want to have too much stock on hand because new
models often come in only between every two months. They have to
sell them fast and cheap, or people will just go to other
stores," said the dealer, who asked for anonymity.

Traders also had to sell phones fast because the price of new
cellular phones would usually drop in two months due to the
strengthening of the rupiah.

He said the fast sales of new cellular phone products was
partly due to the tendency of Indonesian consumers switching to
the latest model launched on the market.

"About 15 percent of customers coming to a store in a day will
buy a new type to replace their current one," he said.

Alie said customers here liked American and European-made cell
phones such as Motorola, from America, Nokia, from Finland,
Ericsson, from Sweden, and Siemens, from Germany, rather than
Asian-made products like Samsung and Panasonic, new or second-
hand.

The relatively cheaper Asian products were less sold because
their new products reached the market one or two months behind
the new ones from Europe, he said.

He said Nokia might now hold the largest market share in Roxy,
especially within nonauthorized stores, with about 30 percent,
followed by Ericsson with about 15 percent and Samsung with 12
percent.

"The proportion between the number of cell phones sold by the
authorized and nonauthorized stores is equal," he said.

Many people preferred to buy cellular phones from
nonauthorized stores because they could get the same genuine
product but at a cheaper price, he said, adding that the price
difference was between Rp 50,000 and Rp 200,000.

He said cellular phones sold by authorized dealers were more
expensive due to the additional fees for spare parts and service
guarantees provided by the brand dealers.

Another cellular phone merchant said authorized dealers had to
sell the cell phones at higher prices than the nonauthorized ones
because they had to cover taxes, including the 10 percent import
duty. (cst)