Grey market mobile phone sales in the Middle East to decline

Middle East sales of counterfeit and "grey market" mobile phones is set to decline once again this year to 38.2 million units.

The region is the world's second-largest grey handset market behind the Asia-Pacific according to research firm IHS. Worldwide shipments are set to drop by 12 per cent this year to 194.6 million units. "The market for counterfeits will continue to decline given the fact that the starting price for smartphones has continued to drop," says Ashish Panjabi, the chief operating officer at Jacky's Electronics.

"Today established brands like Samsung have smartphones priced at Dh299.

"There are a whole host of brands that also manufacture Android-based phones at even more competitive prices whether they be brands from China, India or even some local OEM brands such as Touchmate and Prestegio," he says.

According to retailers, the local grey market thrives when there is a shortage in supply, delayed product launches or a large disparity between the price of a device in the UAE and overseas markets. "What we've seen in the last couple of years has been an increased focus given to the region in general to address most of these issues," says Mr Panjabi.

"During various periods of this year we've seen the price of both the Samsung Galaxy S4 and the Apple iPhone 5 in the official market drop below that of the grey market because pricing adjustments have happened here possibly quicker than other parts of the world."

Delayed launches for Apple products especially pushed prices up to double or triple the recommended retail price on the grey market in the UAE. Now manufacturers are increasingly giving precedence to the region, consumers no longer need to wait months before handsets arrive here, helping to minimise grey-market demand. A fall in demand for lower-end feature phones is also driving down the grey market, which IHS believes will fall further next year to 173.8 million units worldwide.

"A combination of supply and demand factors is causing demand to decline for grey market cellphones," says Kevin Wang,the director of China research at IHS. "On the demand side, the consumers in emerging markets who used to be the majorbuyers of grey market cellphones increasingly are preferring brand-name handsets," he says.

"On the supply side some grey market handset makers have become branded manufacturers in order to promote their own names in developing countries."