MOBILE PHONE INDUSTRY IN THE PHILIPPINES:

IMPORTED AND LOCAL PHONES MARKET SHARE IN 2014 - 2018

In Partial Fulfilment in

International Business and Trade

CBM321- 0956

3:30pm – 4:30pm

Presented to:

Adriane John P. Luncido

Submitted by:

Baligasa, Michelle M.

Baquial, Jescel S.

Cagampang, Christiansen M.

Cortez, Dana Moore Q.

Cuesta, Lealyn C.

AUGUST 2019
RATIONALE

The mobile phone has arguably become the most ubiquitous information

communication technology (ICT) in the world, including in the developing world (Uy-

Tioco, 2013). Flat screen televisions, gigantic audio speakers, talking machines and

many more are on the move in hooking up people’s attention. But one thing stood up

and stayed on top, mobile phones. Whether eating a meal, driving a car, reading a

book, and even peeing inside a comfort room, there’s always a phone held by a

hand. According to Bankmycell (2019), there are 2.71 billion users of smartphone in

the world today and 66.53% of people have mobile devices worldwide. Yet the

statistics are still expected to increase in the future years to come.

In the Philippines, there are roughly 72,600,000 users of mobile phones and

ranked 21st with the most number of users of mobile phones in the whole world

(Statista Research Department, 2019). One cannot deny that Filipino people just like

anybody else has been swallowed to technology. In fact, Philippines was considered

the texting capital (Uy-Tioco, 2013) and the social media capital of the world (GSMA

Intelligence, 2014). It has been studied by experts that mobile phone for users is not

merely a phone. It has its uses in communicating, even in banking and accessing

information about the government and the society.

Filipinos are rapid adopters of new technology and have been quick to

embrace and engage in new services (GSMA Intelligence, 2014). Before mobile

phones, inexpensive laptops were being widely championed as the way to give the

developing world access to the powerful information and communication technology

that has transformed other countries prosperous. But not all are fortunate to acquire

one. Some even seek a handful device that is at low cost and robust. Then, there is
the mobile phone high-tech tool that is already low-cost, robust and frugal with

electricity came into existence. It is thus beneficial to import mobile phones due to

the fact that it provides a significant connection to people in communicating buyers

and sellers, helping the unemployed find jobs, transferring electronic payments and

performing all kinds of other important tasks that usually take longer.

Meanwhile, according to Ehrlich (2006), London Business School estimates

that a 10 per cent increase in mobile penetration in a developing country can boost

that country's economic growth rate by 0.6 percentage points per year. Last year,

Philippines yield a 58% mobile penetration (DataReportal, 2018). Increase in

productivity is expected when there is high penetration and mobile penetration is

positively related with usage of mobile technologies.

On the other hand, smartphone market in the Philippines is a booming market

due to the growing demand of the Filipinos for about 20% year-over-year growth.

This gives the country as the fastest-growing smartphone market in Southeast Asia

to date (Targeted News Service, 2016). Thus, it is important to know its part on the

economic standing in the Philippines.

Philippines indeed have huge imports of smartphones from foreign countries.

Though it has its own locally-manufactured smartphones, MyPhone, Cloudphone,

Netphone, Torque, Maxx and Cherry Mobile, but the handset market is a highly

competitive market surrounded with global vendors. It leads to a question of why do

Filipinos still import smartphones from abroad? To sum up, mobile phones equates

to substantial social and economic benefits.

OBJECTIVES OF THE STUDY

The overwhelming objective of this study is to determine the effect of

importing mobile phones to the Philippine economy.

Particularly, this paper aims to:

1. Present the volume and value of imported mobile phones in the Philippines.

2. Determine the impact of the importation to the economy of the Philippines.

2.1 Culture

2.2 Health

2.3 Values

SIGNIFICANCE OF THE STUDY

This study is important since international trade between different countries is

an important factor in raising living standards, providing employment and enabling

consumers to enjoy a greater variety of goods. The result of the study will be a help

to the following individuals:

Mobile Phone Market Industry. The use of information presented in this study

would be able to enhance the attributes of their product gaining edge over its

competitors and giving information that preference of consumers is important

consideration of producing cell phones.

Mobile Phone Retailers. This study would help them to plan on what brand and

mobile attributes or features should they be selling in their stores and will provide

information about the qualities that consumers are looking for their preferred phone.
Customer/Client. They would be able to know what particular mobile phones that

could be convenient for them and will achieve their level of satisfaction.

Government. Through the findings of the study, the government will be enlightened

about the subsidies that they can offer to local producers to balance trade.

Future Researcher. They could use a reference to any future researcher or

exploration that involved on attributes affecting import mobile phones.

SCOPE AND LIMITATIONS

The research study focuses only in knowing the impact of importation of

mobile phones specifically in the Philippine economy in general and in regards to

health, culture and values. As well as determine what countries export mobile

phones in the Philippines. This study will also reflect the value and volume of

imported mobile phones in the country in 2014-2018.

METHOD

In this chapter, in obtaining the relevant information and data, the researcher

gathered data through step by step process as enumerated below:

1. Access to reliable websites in pertaining data for the study including

International Data Corporation, Statista Research Department,

Counterpoint Research, Philippine Statistics Authority, and others.

2. Search relevant information corresponding to the imported and local

mobile phones in terms of volume and value traded, the demand of the

Filipinos, and economic reasons why Philippines import mobile phones

from other countries.

3. Check the validity and credibility of the information gathered to make the

study relevant to the current social and economic issues through cross

referencing.

4. Encode statistical data to the Microsoft excel for the computation, tables

and figures.

5. Analysis of data gathered based on the results of the study.

RESULTS AND DISCUSSION

The study consists of the volume and value traded of imported and local

mobile phones in the Philippines. It also includes the impact of importing mobile

phones to Philippine economy and to answer research objectives of the study.

74,000,000 72,600,000
70,900,000
72,000,000
70,000,000 68,700,000

68,000,000 66,000,000
66,000,000
64,000,000 62,800,000

62,000,000
60,000,000
58,000,000
56,000,000
2014 2015 2016 2017 2018

Figure 1.1: Users of Mobile Phones in the Philippines

From the data above, we can conclude that the number of mobile phone

users increases in a significant number every year. Smartphone market therefore in

the Philippines is a booming market due also to the growing demand of the Filipinos

year-over-year. This gives the country as the fastest-growing smartphone market in

Southeast Asia to date (Targeted News Service, 2016). A steady rise in disposable

incomes and the purchasing power of local consumers has boosted demand for low-

to-mid priced smartphones with good technical specification and decent cameras.

Subsequently, manufactures such as Vivo, Oppo, Huawei and Samsung have been

quick to offer mid-range models which cost between PHP10,000-25,000 based on

the latest study of Euromonitor International.

Table 1.1: Trade Volume of Imported Mobile Phones in the Philippines : 2014- 2018

TOP COUNTRY EXPORTER

YEAR NO. OF UNITS
SOUTH KOREA CHINA TAIWAN

2014 12,596,000 1,675,268 604,608 -

2015 8,110,066 1,319,035 444,752 517,086

2016 16,600,000 3,818,000 3,569,000 -

2017 15,000,000 2,550,000 3,000,000 750,000

2018 16,000,000 3,200,000 6,720,000 -

The smartphone industry is defined by innovations. Every year we witness

smartphone companies sell a brand new idea, feature, or design. However, the

number of units each year fluctuates depending upon the demand of the Filipino

users as stated by Ooi (2018) that the majority of end users are in no rush to acquire

a new handset if they have been using midrange ones, as the handsets are of

decent quality and priced considerably high for this budget-conscious region,

resulting in longer life cycles and replacement rates. The top foreign vendors in the

market are Vivo, OPPO, and Huawei of China with a significant market share of 6.72

million units and followed by South Korea with 3.2 million units. Notably, in 2018

Chinese players step up and redefine themselves as global brands that cause other

brands to reduce their units or some exit the market.

 Philippines Mobile Market Vendor and Trade
Volume in 2014

CHERRY MOBILE (21.9%)

2,758,524
5,328,108 SAMSUNG (13.3%)
1,675,268
MYPHONE (11.2%)

1,410,752 LENOVO (6.5%)

818,740
TORQUE (4.8%)

OTHERS (42.3%)
604,608

Figure 2.1. Philippines Mobile Market Vendor and Trade Volume in the Philippines in 2014

According to International Data Corporation (IDC) Philippines shows a

significant upsurge in mobile phone shipment during 2014. Along with it comes the

news that Cherry Mobile has been named the top smartphone vendor in the country,

pulling an upset victory against Samsung who now sits in the second place. A total of

12,596,000 million mobile phones were shipped in the Philippines in 2014. The

reason for the upsurge in the smartphone adoption in 2014 is primarily due to the

narrow price gap between smartphones and feature phones. There are only two

global brands made it in the top five which are Samsung from South Korea with

13.3% and Lenovo from China with 6.5%. The rest are all local brands which

account to almost 38%, including Cherry Mobile with 21.9% which dominated the

local market in 2014.

 Philippines Mobile Market Vendor and Trade
Volume in 2015
CHERRY MOBILE (19.55%)
1,585,644
3,752,528 SAMSUNG (16.26%)
1,319,035
ASUS (6.38%)

MYPHONE (6.06%)

LENOVO (5.48%)
517,086
OTHERS (46.27%)
444,752 491,622

Figure 2.2. Philippines Mobile Market Vendor and Trade Volume in the Philippines in 2015

The figure above shows Cherry Mobile and Samsung are almost equal in

terms of volume although Samsung still leads the pack in terms of value. During

2015, local brands have a greater market share in total of 25.61% with Cherry Mobile

and MyPhone. Followed by Samsung with 16.26%, Asus with 6.38%, and Lenovo

with 5.48%.

Philippines Mobile Market Vendor and

Trade Volume in 2016

SAMSUNG (23%)
3,818,000
6,427,520 CHERRY MOBILE (16.78%)
2,785,480 OPPO (13.2%)
HUAWEI (5.1%)
2,191,200
VIVO (3.2%)
OTHERS (38.72%)
531,200
846,600

Figure 2.3: Philippines Mobile Market Vendor and Trade Volume in the Philippines in 2016
 According to the firm’s Asia/Pacific Quarterly Mobile Tracker, 16.6 million

mobile phones units were shipped to the Philippines in the year 2016. Local

smartphone vendors still appear to have the lion’s share of the sales in the

Philippines, and budget phones under PHP3,500 lead the way. However, global and

Chinese vendors are gradually catching up on the budget segment. Notably,

Samsung of South Korea with 23% and OPPO, Huawei and Vivo of China which

comprised of 21.5% entered the mid-range price of smartphones.

Philippines Mobile Market Vendor and Trade

Volume in 2017

3,450,000
5,250,000 CHERRY MOBILE (23%)
SAMSUNG (17%)
2,550,000 OPPO (12%)
VIVO (8%)
1,200,000 1,800,000 ASUS (5%)
OTHERS (35%)
750,000

Figure 2.4: Philippines Mobile Market Vendor and Trade Volume in the Philippines in 2017

During this year, Filipino smartphone maker, Cherry Mobile, was the 2017’s

most successful brand in the Philippines in terms of units shipped, according to

International Data Corporation (IDC). Cherry Mobile accounted 23% of all the

smartphone shipments in the Philippines in 2017 or 3.24 million units of the 15

million units shipped by all brands. Samsung of South Korea followed with a 17%

market share, China’s OPPO and Vivo has a total market share of 20% or 3 million

units, followed by ASUS of Taiwan with 5% market share or 750,000 units shipped.
 International Data Corporation (IDC) credits Cherry Mobile’s success primarily

to its pricing that cost less than PHP5,000 and has been consistent with their

marketing efforts that maintain nationwide presence. Samsung owning a 17% of the

market or 2.55 million units sold owes its success to its J-series phones with lower

cost ranging from below PHP10,000 to around PHP20,000. OPPO, with a 12%

market share, found their success by marketing their phone’s selfie capabilities and

gaming segment.

Philippines Mobile Market Vendor and Trade

Volume in 2018

3,360,000 3,200,000
SAMSUNG (20%)
CHERRY MOBILE (17%)
1,920,000 2,720,000
VIVO (16%)
OPPO (14%)
2,240,000
2,560,000 HUAWEI (12%)
OTHERS (21%)

Figure 2.5. Philippines Mobile Market Vendor and Trade Volume in the Philippines in 2018

According to the report from the International Data Corporation, the average

selling price of smartphone shipments reveal that the public is more willing to spend

money on phones as long as they were equipped with reliable features and

specifications. Filipinos are ready to devote cash for smartphones that allow better

usage and accessibility. Samsung which offers formidable approaches when it

comes to pricing and availability landed in top spot, it has 20% market share during

2018. Cherry Mobile, with its affordable yet functional lines of smartphones is still
part in the top five although it recently suffered a minor decline, attributed to the stiff

competition and intense marketing by aggressive international smartphone brands.

Chinese trio- Vivo, OPPO, and Huawei has gained significant market share. The

Chinese onslaught has led to a significant decline of local brands

30.00% 28.28%

25.00%
20.00%
20.00%
16.93% 17.00% 16.50%
16.00%
15.00% 14.00%
12.00% 11.13%
10.00% 9.39% TRADE VOLUME
10.00% 7.54% TRADE VALUE
4.50% 4.69%
5.00%

0.00%

Figure 3.1: Trade Value and Volume based on Percentage of Mobile Market Vendor in 2018

Figure 3:1 illustrates the percentage of market share of mobile vendors in

terms of trade value and volume in year 2018. According to Statista Research

Department, Samsung was the market leader among mobile vendors with a market

share of 20% trade volume and 28.28% trade value. Chinese smartphone

manufacturers such as OPPO, Vivo and Huawei are intensifying their marketing and

retailing strategies in the Philippines. They all frequently use local and international

celebrities to endorse their brands in an effort to improve consumers’ perception of

Chinese-made smartphones, which were previously viewed as being of poor quality.

Cherry Mobile remained one of the leading players in smartphones in 2018. The
company’s ability to retain its position in a competitive category can be attributed to a

combination of affordable products,

Impact of Mobile Phones to Filipino Users

As the importation of mobile phones continues to arise, Filipino tends to

spend more time using mobile phones. According to a report by We Are Social and

Social Media Management Platform Hootsuite showed that Filipinos spend the most

of the time on the internet and on social media sites.

In the 2014 study which covered Philippines and 13 other Asia Pacific

countries, showed that about three in every five or 59% of the online population in

the Philippines access the internet to shop up from 40% in 2013.

Time Spent per Day Using Social Media

South Africa 2:48
Saudi Arabia 2:50
Malaysia 2:58
U.A.E 2:59
Egypt 3:04
Ghana 3:07
Thailand 3:11
Mexico 3:12
Nigeria 3:17
Argentina 3:18
Indonesia 3:26
Columbia 3:31
Brazil 3:34
Philippines 4:12
0:00 1:12 2:24 3:36 4:48
Time Spent per Day Using
Social Media

Figure 4.1: Time Spent per Day Using Social Media

 The data showed Filipinos usually spend over 4 hours on social media daily,

followed by Brazilians 3 hours and 34 minutes and Columbians for 3 hours and 31

minutes. Philippines being the top spent per day in social media.

Time Spent per Day Using the Internet

7:15
Taiwan 7:39
7:47
Egypt 7:53
7:54
Mexico 8:01
8:05
Argentina 8:19
8:25
Indonesia 8:36
9:00
Thailand 9:11
9:29
Philippines 10:02
0:00 1:12 2:24 3:36 4:48 6:00 7:12 8:24 9:36 10:48

Time Spent per Day Using…

Figure 4.2: Time per Day Spent Using the Internet

The report also showed Filipinos spend on the internet with an average of 10

hours and 2 minutes on the internet via any device and Brazil came in second place

with internet usage averaging 9 hours and 29 minutes and Thailand came in third

place at 9 hours and 11 minutes. This is the fourth year in a row that the Philippines

topped internet use worldwide.

 Activities Using Mobile Phones

29.40% 38.40%

29.90%
35.10%

31%

Airline Tickets
Home Appliances and Electronic Products
Clothing and Accessories
Booked Hotels

Figure 4.3: Activities Using Mobile Phones

This figure shows the percentage of Filipinos using their mobile phones. They

used internet to purchase airline tickets (34%), home appliances and electronic

products (35.1%), clothing and accessories (31%), book hotels (29.9%) and

computer software (29.9%). It indicates that Filipino like online shopping because

they were able to do it on the go and made it more convenient for them.

Diseases due to Mobile Phone Devices

90%
80%
70%
60%
50%
40% 74% 80%
30%
20% 37% 45%
10% 21% 11%
0%
Brain Tumor Male Infertility Heart Disease Effect on Fetus Ear Hearing Alzheimer's
Function Disease
Diseases due to Mobile Phone
Devices

Figure 4.3: Diseases due to Mobile Phone Devices

 Another impact of spending most of the time in using mobile phones is in the

human health of individual. According to research, mobile phones affect human

health because it has radio frequency energy that can absorb our body. Excessive

usage of mobile phones causes sleep deprivation.

Data above summarize the diseases that may affect Filipinos in too much

exposure on mobile phones that can affect the immune system of the person. It

shows that 80% has the probability to have ear hearing dysfunction because of too

much use of headphones or earphones with loud disturbance that can cause hearing

loss, 74% brain tumor and other diseases that affect human health.

Mobile phones also reshape Filipino culture, media, productivity and identity.

Some situations that affect the culture of Philippines are employees texting or

receiving phone calls while serving customers, mail carriers making their way

through neighborhoods, while chatting on the phone, people on public transit

occupied on mobile devices instead of reading newspapers, or even glancing at

those around them, friends at a cafe focused on communicating with those who are

not at the table, walking and texting while crossing, and personal connections

interrupted and reprioritized. Values of Filipinos also change in terms of prioritizing

taking selfies anywhere especially while eating. Most Filipino teenagers find

satisfaction in posting irrelevant information that can cause misunderstanding among

Filipino people.
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