Global grey smartphone market declines as GSMA fights back

GSMA to the rescue

The GSMA, a global mobile industry association managing device identity and network standards, handset IMEI database helps combat grey imports and illegal smartphones by providing a global registry of legitimate devices. Mobile operators, customs authorities, and regulators can use it to identify counterfeit or unauthorized phones through invalid or duplicated IMEIs. It enables blocking of unregistered devices from networks, supports anti-smuggling efforts, prevents unauthorized activations, and deters theft by tracking blacklisted handsets. This protects consumers and promotes compliance with market regulations and device certification standards.

Feature phones lead the downturn

The contraction is primarily driven by the sharp decrease in sales of low-end feature phones. While ultra-low-cost handsets and grey-market smartphones are seeing limited growth, these categories are not expanding quickly enough to offset the steep drop in feature phone sales.

Counterfeit and white-box phones under pressure

Grey-market devices include counterfeit Apple iPhones and so-called white-box handsets, which often carry fake logos and use uncertified or smuggled components. Many of these phones also rely on fake IMEI codes and enter markets through channels such as Hong Kong to avoid value-added tax. With currency appreciation in China and increasing competition among counterfeit producers, the business is becoming less profitable.

Shifts in consumer and supplier behaviour

Kevin Wang, director of China research at IHS, noted that consumers in emerging markets, once the main buyers of grey-market handsets, are increasingly turning to branded devices. On the supply side, some grey-market manufacturers have transitioned into branded players to gain recognition in developing countries.

Regional markets show diverging trends

Asia-Pacific remains the largest grey-handset market, with strong sales in India, Vietnam, Thailand, Pakistan, Indonesia and the Philippines. Yet even here, shipments are expected to decline from 103 million in 2013 to 53 million by 2017. The Middle East and Africa, which overtook Central and Latin America as the second-largest grey-handset market in 2012, will also see a reduction to 38.2 million units this year. Eastern Europe continues to be an active market, with Russia and Ukraine highlighted as key destinations.

China remains a major producer

In China, overall handset shipments are forecast to grow to 840 million in 2013, up 2% from 2012. Within this, the smartphone segment is expected to expand to 361 million units, offsetting losses in feature phones. Ultra-low-cost handsets also remain in demand among low-income consumers in developing economies.