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Declining purchasing power diminishes mobile phone sales by 30% - Daily News Egypt

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Declining purchasing power diminishes mobile phone sales by 30%

We cut down our marketing budget by 70% to support the difference in prices, says Abdelmohsen

Mobile phone sales have fallen significantly due to the recent rise of the US dollar against the Egyptian pound, said Tarek Abdelmohsen, marketing director of JoVi Tronix, HTC’s exclusive agent in Egypt.

Abdelmohsen estimated the fall to be between 20% to 30% in 2016, as the purchasing power of a large segment of consumers declined.

The company had to cut down its marketing budget by 70%, so as to use the money to support the difference in prices and maintain HTC’s prices unchanged.

The coming period will see the launch of new mobile phones of prices between EGP 8,000 and EGP 10,000. The new prices, according to him, come as a result of the pound depreciation. He pointed out that many competitors were also forced to increase their prices.

Commercial director of Log In, Infinix’s agent in Egypt, Montasser Shaaban, said the company is looking into reducing the prices of its devices with its main manufacturer in China. The move comes to match the Egyptian market in light of the decline in the purchasing power of the majority of consumers.

The company resorted to reducing its profit margin to avoid increasing the prices after the dollar price exceeded EGP 10 on the parallel market. This move was to increase the company’s market share in Egypt and meet the demands of consumers.

Samsung also had raised its prices of mobile phones, tablets, and smart watches during the first quarter of this year by 6% to 9.8%.

The price of Samsung’s Galaxy S6 Edge increased from EGP 7,100 to EGP 7,700. The price of the Galaxy S6 also increased from EGP 4,900 to EGP 5,200. Tablets’ prices rose by 7-7.4%, where the price of Tab 3 increased from EGP 1,300 to EGP 1,400, while that of the Tab S2 reached EGP 5,200 from EGP 4,900.

Essam Badr El Din, a mobile phones dealer and owner of retail chain Badr El Din, said the market has been seeing a decline in demand on mobile phones due to the rising price of the US dollar.

He predicted that sales will continue to decline as the holy month of Ramadan nears. He justified his opinion saying that consumers always tend to spend more on entertainment and food in Ramadan.

Badr El Din said that some companies increased their prices by 5% to 15% from June. Even mobile accessories and spare parts, which are all imported from China, have suffered increases as well by almost 50%.

Another mobile phones dealer, Mahmoud Farouk, owner of Radwan mobile phones, also agreed—saying that the market has been in recession for almost two years and sales have dropped by 50%. He was forced to increase his prices by 15% to offset the sales decline.

The Central Bank of Egypt (CBE) raised the price of the US dollar against the pound to EGP 8.88. Moreover, the CBE imposed several strict import controls, while the Egyptian market suffers from lack of dollar availability, which drove its price up on the parallel market to as high as EGP 10.80.



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