‘Fong Kongs’ sour Samsung’s push into Botswana

The explosion of counterfeit mobile phones and accessories in Botswana could have the unintended effect of turning away investors and exporting potential local jobs elsewhere.

World leading smartphone producer, Samsung is contemplating reaching out to local law enforcement authorities and the telecommunications regulator, BOCRA, as its push into the lucrative Botswana market encounters massive counterfeit devices and accessories in the local market.

The sheer scale of counterfeit Samsung devices and accessories, which are believed to originate from the Orient, swayed Samsung South Africa and Southern Africa executives who visited Botswana this week.

For the executives, Botswana represents a unique challenge in the 18 African countries in which the mobile giant has a physical footprint.  Outside of South Africa, Botswana is potentially Samsung’s most lucrative market in Southern Africa, ahead of Lesotho, Namibia and Swaziland.

However, in the whole of Africa, Botswana also has one of the largest and most stubborn counterfeit phone markets or conversely, it is one of the most lucrative markets for Asian counterfeiters of devices and accessories such as chargers and headsets.

The country’s unique status stems from its mobile telecomms history.

Botswana experienced an explosion in mobile telephony uptake after the initial introduction in the late 1990s.

From zero in February 1998, the number of mobile phone subscribers grew exponentially to 563,782 in March 2005, 2.4 million in March 2010 and 3.4 million in March 2015.

The last figure means at least 161 mobile subscriptions for each 100 people in the country.

 While the mobidensity has been lauded as evidence of massive mobile telecomms investment and uptake, the rapid growth over the years has been fuelled by cheaper access costs and lower prices of devices.

As previously noted by the Botswana Communications Regulatory Authority corporate communication deputy director, Aaron Nyelesi, declining prices of devices were key to the cellphone boom.

From April 25, 1998 when Mascom sold its first Motorola Startac model 85, device prices were high, but declined rapidly with greater uptake and the breakneck speed at which lower cost models and varieties were introduced.

The original models such as Motorola, Siemens and Nokia suddenly found themselves under pressure from newer, cheaper and more intelligent varieties lowering the price and making the market accessible to more Batswana.

“In 1998, mobile phones were almost for the elite, but now everyone can own one, even those working at the cattle post,” explains Nyelesi.

“You can get one for P100 or less or buy a P10,000 one if you want. It is now a universal gadget and smartphones are now the in-thing due to the shift from voice to data.

“We have noticed that every time new technology comes in, the old becomes cheaper. If a new iPhone comes in, the price of the old one goes down.”

With lax customs controls, a burgeoning Asian retail sector and non-existence of cellphone quality control standards, the huge appetite for mobile telephony in Botswana was always going to attract counterfeiters.

Asian counterfeiters found a ready, willing and safe market for their counterfeit and grey phones and at present, conservative estimates suggest that at least two in every 10 phones in Botswana belongs to one of these categories.

Grey phones are those coming into Botswana from outside the import channels provided by official manufacturers and thus not under warrantee, while the counterfeit are devices illicitly produced and marketed as genuine, known brands.

Samsung officials are in two minds about what to do about the opportunity and challenge offered by Botswana. While they would want to take the bull by the horns and confront counterfeiters of their brand, they are also eager not to appear as if they are dictating to local regulators and authorities what to do.

In this light, they are circumspect in their remarks about the issue. An example of this is the following interview with Samsung Electronics South Africa director of Corporate Marketing and Communications, Michelle Potgieter on Tuesday.

Mmegi asks: “Of your African countries that have serious problems with counterfeit problems, where would you rank Botswana?”

Says Potgieter: “In such markets, we are always launching ‘Buy Genuine’ campaigns because we see that there’s a problem of grey goods or counterfeits. We advise customers and say ‘do your market research. You know what these products should cost’. We invite authorities to partner with us if they see it as a serious problem”.

In June, Samsung conducted its first Buy Genuine campaign in Botswana, which, going by Potgieter’s comments, suggests that the global brand sees a problem in the local market.

Samsung Electronics Southern Africa director of services, Richard Chetty, is far more forthright. Being in charge of a portfolio focusing on after-sales care, Chetty has found that a good number of complaints about Samsung phones in Botswana stem from the fact that customers are actually using fake devices or accessories.

“I have gone out to many different areas in Botswana and have found fake products being sold in your market,” he says.

“There are a lot in Botswana. You buy a phone that comes with some strange stylus that turns out to be useless.

“Your market is riddled with quite a lot of that and we need to go out and make sure our consumers are aware of what they are purchasing.”

According to Chetty, there are several clues that the Samsung phone or device you are holding is fake. One is the price, where the counterfeits are ridiculously discounted and another is the amount of time the phone takes to start up. With the new Samsung Galaxy 6 phones, a look at the off-screen will hint whether the device is genuine or not.

Chetty says another awareness campaign is pending for Botswana. Samsung also plans to engage authorities and regulators as it has done elsewhere in Africa where its brand has been violated by fakes.

“In other parts of Africa, we have actually gone along with police on raids and arrests of those distributing counterfeit phones. We hope to do the same here. Soon,” he says.

Fakes have the potential of turning away Samsung’s further planned investment in Botswana in the form of brand stores and service shops. According to Matthew Thackrah, the mobile giant took a decision a few years ago not to merely sell its products in Botswana.

“It’s not just about selling products. It’s about employing Batswana and growing the economy. Our products must make your life better. We now have dedicated stores with an array of products that are bringing technology to the consumer, instead of the consumer having to go to Game or elsewhere,” explains the deputy MD and head of consumer electronics at Samsung Electronics SA. Samsung presently has two brand stores in Gaborone and another in Francistown. According to Chetty, the mobile giant will also introduce Quick Repair Service centres in the two cities, which will offer a one-hour repair time for all device issues.

 “We will also be launching in-home repair service for the bulkier appliances. This is where our technicians will repair Samsung products at the customers’ homes,” he says.

Through the Buy Genuine campaign, the two-year warrantee and the enhanced service support, Samsung hopes to entice Batswana away from the allure of cheaper fakes and avoid having to rope in authorities to protect their brand in a blossoming market.