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The irregular import of cell phones and other electronics has always been common in Brazil — giving rise to an illegal market that creates unfair competition between these devices and those manufactured by Brazilian and multinational companies that officially import their products here.
At the end of 2022, the total number of illegal cell phone sales in Brazil represented 10% of all sales. However, the jump occurred at the end of 2023, when this market started to represent a worrying 25% of total sales in the Brazilian market.
The data was provided in a report released in March by Abinee - Brazilian Association of the Electrical and Electronic Industry of Brazil, which issued alerts to manufacturers operating in the national market, such as Samsung and Motorola, first and second in the sales ranking in Brazil.
Also according to Abinee, the number of illegal cell phones sold in Brazil reached 6,2 million devices, a 77% jump in 2023. In 2022, 3,5 million units of illegal smartphones were sold.
The biggest concern surrounding the issue is that if projections are confirmed, 2024 could see an increase in the sale of these cell phones, reaching an impressive 33%. By way of comparison, total sales of Motorola represent 30% of the national market.
Paraguay, the gateway for irregular cell phones
Within this panorama that points to the growth of a parallel market, the biggest difficulty is preventing the entry of irregular cell phones into our neighboring country, Paraguay. The majority of all smartphones Irregulars in Brazil arrive here via the land border between the countries.
Data collected by Abinee itself indicates that Paraguay was responsible for importing 7,5 million irregular cell phones. Of these, 77% were from the Xiaomi brand, followed by 8% from Samsung and 4% from Motorola and Apple.
Other brand models Oppo e Realme, have also been gaining more and more strength in the parallel market. The journey to Brazil is made by motorcycles, which carry small quantities of these devices, which become imperceptible for inspection at the border.
Despite the efforts of Federal Highway Police and also from Federal police in investigating and seizing this type of merchandise, Humberto Barbato considers that “border inspection is not being efficient in curbing this very serious problem”.
On Brazilian soil, sellers offer irregular cell phones for sale at prices sometimes up to 40% or 50% lower than those charged in the normal market. With this, a Redmi Note 12, the most smuggled model, costs between R$700 and R$900. The normal price of the device is around R$2.900 (top of the line device).
These devices are not approved by Anatel (National Telecommunications Agency), which may result in limitations in its operation, especially with regard to the operating frequency bands. Because they have not been validated in the tests required for approval by the regulatory agency, even basic components such as the battery and charger may present problems that would not occur in approved cell phones.
Border inspection is not being efficient in curbing this very serious problem.
Humberto Barbato, executive president of Abinee.
Union between Marketplaces and the gray market
The camelódromos — trading centers for illegally imported goods, mostly brought from Paraguay — were the main distributors of pirated electronics, but with the popularization of the internet these products began to be easily found in marketplaces , the Amazon, Mercado Livre, Magazine Luiza, Ali Express, Shopee e Kabum!.
The weight of the names of these large retailers ends up endorsing, and often promoting, the “false legality” of products sold by their selling, name given to stores or sellers that use platforms to resell their products to more consumers. In many cases, the vendors at the old camelódromos are now selling of these online stores.
Previously, Humberto Barbato had said that Mercado Livre e Amazon would be most responsible for piracy sold in Brazil. The statement came at a press conference held in December 2023. At the time, Barbato said that the two companies would not have signed the Anatel.
The agreement was inserted within the Action Plan to Combat Piracy, signed in 2022. In it, the Brazilian agency wanted more efforts in blocking ads and also the commercialization of smartphones that were not approved by the Anatel.
Meetings held with the participation of companies such as Bahia Houses, Point, Magazine Luiza e American stores (also representing Submarino e shoptime) resulted in the creation of a mechanism that blocked advertisements that linked this type of illegal sale.
According to the Abinee, 90% of smuggled cell phones in Brazil are sold on marketplaces. Generally, these devices are found for sale with a value 38% below the values practiced on the official market.
Thinking about ways to stop this type of illegal sales, the Abinee demands effective actions from Brazilian authorities, such as the creation of shared responsibility, in which marketplaces would assume responsibility for suspicious movements on the platforms involved.
This type of sales was more restricted, the result of requests made in meetings between Abinee and representatives of the government and companies in the sector. However, the practice has been noticed more frequently in recent months and, according to the president of Abinee, “after realizing that they were losing sales, some websites decided to ignore the sale of irregular devices”.
The strategy of Chinese manufacturers
Thanks to the Chinese economy, the irregular market is increasingly reaching significant numbers. Abinee executive, Humberto Barbato, reported that China's production capacity is growing at 7% to 8% and, since the Chinese economy is not growing, products end up being left over for export.
The demand for this type of device has reached significant numbers in Brazil in recent years. Even with the high risk of purchasing a device that is not approved, that is, one that does not have the certification seal of Anatel, the gray market continues to grow.
This is because Chinese companies end up effectively exploiting the space offered by marketplaces. With the surplus of devices on the Chinese market, it is necessary to redistribute them to other countries and the solution is to enter the country with the products not meeting the Brazilian government's specifications.
The main attraction of this market is concentrated in the prices of the devices. Models considered intermediate are sold at prices well below the official market. In short, irregular devices are sold costing up to 50% less than legal products.
Brazilian government response
The problem of selling irregular cell phones is present in several Latin American countries, such as Mexico and Colombia. However, the Brazilian market represents an enormous potential for this type of practice, culminating in a loss, estimated by Abinee in R$4 billion annually in tax collection. To give you an idea, the state of São Paulo alone loses R$1 billion per year in ICMS collection.
Currently the Anatel plans to enter the IRS, Siscomex. The agency has been waiting 16 years to enter the system, which will allow it to monitor imports and exports, intercepting suspicious shipments before they fall into the wrong hands.
Given the still uncertain scenario, the Abinee defends more effective action on the part of the National Congress, in the sense that parliamentarians create stricter legislation, which is capable of demanding from marketplace in-depth supervision of all selling involved in sales of smartphones.
In addition, there are task forces from Federal police and Federal Highway Police, the main fighters of this type of practice. Frequent monitoring of Brazilian borders, more precisely the portion between Brazil and Paraguay, is the key activity for seizures of smuggled products.
Possible solutions
In order to combat this practice of irregular sales, the Brazilian Government, on behalf of Anatel, recently proposed to marketplaces some observations. Check out:
- Ads that have smartphones must have the code EAN (number that generates the product's barcode and allows the company to identify the device) of the product and the number proving the approval of the model of each device;
- The idea became reality at the end of March and discussions included representatives from marketplaces such as Amazon, Carrefour, Mercado Livre, Shopee;
- As established in the agreement, companies would have 60 days, starting April 15th, to comply and place barcodes on third-party advertisements (June 15th). The database of Anatel is practically ready to start testing.
Control by official bodies must be carried out strictly, ensuring that this type of illegal cell phone is not sold in the country. The increase in this type of market is harmful and could drive large factories away from the national territory, generating a deficit for public coffers.
On the other hand, collaboration between marketplaces must be done spontaneously, in order to vehemently curb illegal trade. The activities of companies such as Mercado Livre, Amazon, AliExpress and many others must be guided by principles that inspire legality, guaranteeing the functioning of the official market.
See also other features
Sources: mobile time, Price, Minha Operadora, Abinee, Valor Econômico
reviewed by Glaucon Vital in 2 / 5 / 24.
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