Cheap Chinese tech imports and their impact in South Africa

Online shopping platforms like Alibaba and AliExpress have made it easier for shoppers to access goods sold by Chinese manufacturers and small businesses.

The items on offer range from iPhone chargers to women’s clothing, all at very cheap prices when compared to local alternatives.

The success of Alibaba has inspired more players to join the market in recent years, with companies such as Gearbest and Wish offering South Africans tech products at low prices online.

Many of these products are shipped from China, however, which introduces a range of hurdles shoppers must overcome to get their goods into their hands.

Another less-considered issue is the potential impact these cheap imports have on local distributors and retailers, who sell the same tech items for higher prices in South Africa.

To find out if these imported products and their sellers are having an affect on the local market, we spoke to prominent ICT distributors Mustek and Pinnacle.

Small for now

Mustek told MyBroadband that international players selling directly to South Africans currently have a small impact on the market.

“For an end-user, there are lots of hurdles to importing,” said Mustek. “In addition, cross-border reverse logistics is a timely and sometimes costly process to take on as a consumer.”

The company added that there are other pitfalls to watch out for in addition to shipping.

“Most branded products are sold as different models in the Chinese market,” said Mustek. A good example is a smartphone, which may be locked to the Chinese language option.

Another barrier to importing tech products directly is a lack of support and service if something goes wrong.

Support is not guaranteed if you have a problem with a tech item you import, while local distributors offer a support structure and experienced assistance in their markets.

“A warranty of a product and repairs are not taken into account, and when required they are non-existent – so the purchaser is caught once, but thereafter is extremely wary,” said Mustek.

While local tech prices may be higher than importing an item from China, the “premium” acts like insurance in case something is wrong with the purchase.

Pinnacle echoed this sentiment, stating that a lack of warranty on a tech product will be problematic for users.

In terms of the impact these imports have had on the local market, Pinnacle said although it only has visibility into its retail channel the company has seen positive year-on-year growth over the past two quarters.

Trade War

Another concern for local tech users, regardless of where they buy their goods, is the trade war between the US and China – and the impact this may have on tech prices.

Mustek said that the exchange rate between the US dollar and the rand is the main factor affecting the pricing of tech in South Africa, however.

The potential trade war may make global demand decline, which could see prices softening, but this is not a primary driver of price.

Pinnacle also stated that the exchange rate dictates price, and they do not see the trade war impacting tech prices in the short-to-medium term.

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Cheap Chinese tech imports and their impact in South Africa