Mobile phones: the crisis and the actions have stopped the landing of a Chinese giant

The tightening of stocks on imports and the shortage of dollars stopped the landing of a Chinese tech giant in the country. This is Xiaomi, the third largest mobile phone manufacturer in the world, which opened its first physical store this year and plans to start producing in Tierra del Fuego. Plans are now on hold and “things got complicated”sources related to the brand complain.

The arrival of Xiaomi has raised many expectations. The reason is that in the local market it is very concentrated: Two brands, Samsung and Motorola, account for over 90% of total cell phone sales. Globally, according to consultancy Counterpoint, Samsung leads with a 19% share. Behind the Korean brand are Apple (17%) and Xiaomi (14%). Motorola, of the Chinese group Lenovo, is the second best-selling company in Latin America (26% of sales in the region).

Barriers to imports changed the whole scenario. Xiaomi was looking for a local partner to assemble in the country and I was about to strike a deal with Solnik, of the Etercore group. He also negotiated with BGH, another Fuegian producer. As a prelude to the official landing, in April Solnik opened a store in the Abasto shopping areatheir first Xiaomi Store, where they offer the entire ecosystem of imported products: smartphones, 4K TVs, scooters, scales and razors. “We have stocks for 45/60 days in most categories”they slipped

The store will continue to operate and plans to produce cell phones are being postponed until we see “how the measures evolve”. That is, if the conditions for the entry of components into the country are made more flexible. Two weeks ago, due to the lack of foreign currency, the Central Bank ordered that companies can import up to 5% more than in 2021. And those that exceed the limit, they have to be funded for 180 days alone.

The tightening of the import blockade has introduced new difficulties in the electronics business. Not only has it postponed Xiaomi’s plans for production in Argentina. It also involved the ongoing operations of Samsung and its local ally (Mirgor) and Motorola, whose license is held by the Newsan group. “The reality is that we are trying to solve the problem of the 6-month loan with the parent company. It is a bit complex because it foresees future shipments of goods “, explain in the sector.

There are several negotiations that run in parallel and in which the local representatives of the brands and producers participate. Each has their own approach, although Mirgor and Newsan have the benefit of long credit histories. “As for remittances overseas at 180 days, it has been established the promise of increasing sales volume. It’s a way to show that Argentina is a good market, “said a source familiar with the negotiations.

The crisis is a new obstacle to adding new brands to the highly concentrated mobile phone market. Chinese brands have long been arguing about breaking Samsung and Motorola’s dominance in the region. The first was Xiaomi, which began its expansion plan in the region in 2019 by opening its own stores. In such a short time it has already positioned itself as the third best-selling in Latin America. In Argentina, Xiaomi had a testimonial presence through Solnik, its sole representative in the country, which directly imports only equipment. The company, which has a factory in Tierra del Fuego, is also licensed by Nokia.