Gray market: 1 million illegal cell phones in Brazil

The technology sector has been profoundly affected by the phenomenon of gray marketa reality that appears to have intensified during 2023. Information obtained by the FreeGameGuide team, through an anonymous source that has access to confidential numbers of a consulting company, indicated a significant increase in illegal cell phone sales Xiaomi No brazil.

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If it were a brand, the “gray market” would be the second largest in the country

The sale of these unauthorized devices has gone from 1 million units. This number is much higher than that of officially sold smartphones of the same brand. DL Eletrônicos, Xiaomi’s only partner in Brazil, only sold 20 thousand devices legally. This amount is much smaller. It’s like a drop of water compared to the sea of ​​illegal sales, which are twenty times more. The source said DL’s legal sales look pretty small compared to that.

When approached to comment on this information and clarify possible issues relating to its sales volumes, DL took a reticent stance. The company preferred not to disclose any concrete data about its commercial results, only criticizing the mentioned number of 20 thousand units, describing it as “inconsistent” and potentially inaccurate.

On the other hand, research carried out by IDC shows an overview of the gray smartphone market in Brazil. They reveal that 25.3% of cell phones sold in the last quarter of last year are part of this parallel market. This means more than 6.1 million illegal cell phones in the country in 2023, involving all brands.

A study by the Brazilian Association of the Electrical and Electronic Industry (Abinee) confirms these data. It shows that a quarter of cell phones purchased in Brazil come from clandestine sales. If we consider the gray market as a “brand”, it would be the second largest in sales in the country, second only to Samsung. This alone shows the strength of this parallel market in Brazil.

Gray market tends to grow in 2024

Data from 2024 shows that this trend is growing, even with the Federal Government’s actions to stop it. One of the actions is the Conform Remittance program. He wants to charge taxes when purchasing in large stores in other countries. Including, the government approved taxation on purchases below US$50. The main objective of this policy is to reduce non-payment of taxes.

“Some Government measures helped to reduce sales on international websites. The numbers fell because of this”, said Andreia Souza, analyst at IDC. However, she observed a consequent increase in the flow of goods from Paraguay, signaling a kind of migration at the origins of the problem.

One of the main causes of tax evasion is precisely cell phone smuggling. Companies that pay their taxes feel unfairly treated. They see illegal trade as unfair and harmful competition.

A study called “Illegal Brazil in Numbers”, carried out by the National Confederation of Industry (CNI), shows this well. This study says that, in 2022 alone, Brazil lost R$453.5 billion due to smuggling and piracy activities. These bad practices affected 16 sectors of the economy. Of the money lost, R$136 billion were taxes that the country was unable to collect.

Source: CNI