LOCAL mobile-phone company Cellprime credited the efficient supply chain and manufacturing efficiency of Chinese suppliers for their growth in the Philippine mobile-phone market.
Eric Yu, the founder and CEO of Cloudfone, said they were able to provide affordable devices to Filipinos because Cellprime was able to develop a strong partnership with Chinese manufacturers. When they initially entered the local market, Cellprime was selling Cloudfone for P7,000. By partnering with Chinese suppliers, Yu said Cellprime is currently selling smartphones as low P1,000.
“Our success can be attributed to our close relationship with China. We stayed the course that allowed us to reach a higher level, and developing higher quality but affordable products,” Yu said in a recent forum on Philippines-China Economic Forum: Toward Philippine Inclusive Growth, held recently in Makati City.
“By getting the right partners, we were able to democratize the access to mobile phones by providing affordable prices,” Yu added.
The event was organized by the Philippine Association for Chinese Studies and the Integrated Development Studies Institute (IDSI).
Cellprime encountered rough sailing during the early years of doing business with Chinese companies because they have a different mind-set, and were not used to dealing with foreign partners. “Aside from the language barrier, Chinese companies were also concerned about how they can get their return on investment and profitability, among others,” he said.
“As we matured and grew the business, we were able to work with competent suppliers,” Yu added.
After fixing the problems with Chinese suppliers, Yu tackled content development. He approached the National Basketball Association (NBA) for possible partnership. He said it was a challenge to deal with the NBA for content development. “The NBA was used to operating in a developed market like the United States,” he said.
“The main issue was bridging the gap transferring the content from the television screen to the mobile-phone screen,” Yu added.
Right now, Yu said Cloudfone’s major goal is to reach out to younger markets. To attract these markets, Cloudfone will continue to pursue innovation, adoption of evolving design approaches and technologies, and rapid product introductions. “Our biggest growth remains the replacement market, as a lot of Filipinos replace their old mobile phones in a short span of time,” he said.
The International Data Corp. (IDC) Worldwide Quarterly Mobile-Phone Tracker predicts 2017 will be a good year for local phone manufacturers as demand for newer gadgets will continue to grow. “Consumers continue to show demand for smartphones, and OEM [oiriginal equipment manufacturers] flagship hype seems as strong as ever,” the report said.
“Worldwide smartphone shipments grew 4.3 percent in 1Q17, which was slightly higher than IDC’s previous forecast of 3.6-percent growth.” Inline with this growth, Cloudfone was the only local smartphone provider in the country to post a sales growth of 11 percent according to the first half of 2017 study results conducted by GFK in the Philippines,” Yu explained. Yu said they had to work hard to achieve the growth. He said Cloudfone will continue to pursue innovation to remain competitive in the local market.
In the same forum, Wellington Liu, Huawei Technologies head of public affairs and communication, said the Shenzhen, Guangdong-based company will give a strong focus on research and development jobs to explore future developments. “Huawei is also considering harnessing artificial intelligence for the future,” Liu said.
To make the company develop a strong recall always in the minds of Filipino consumers, Liu said Huawei will always observe the local market on a frequent basis. Although there is a perception that Chinese-made goods are low quality, Liu added it is interesting to know that iPhones and Samsungs are also made in China.
As far as Huawei is concerned, it is considered a Chinese technology dragon present in 170 countries worldwide. Moreover, he said Huawei Philippines wants to invest more in the Philippines, but it has been a big challenge for the local subsidiary because the country produces insufficient engineering graduates.
“According to the Commission on Higher Education, only about 18 percent of Filipino graduates finish a degree in STEM majors [science, technology, engineering, mathematics]. And most of your best engineers work abroad,” Liu added.
In 2016 China graduated 4.7 million engineers while the United States had 568,000.
In his remarks, IDSI President George Siy said the digital Silk Road offers tremendous opportunities to developing countries like the Philippines.
Filipinos stand to benefit from China’s ambitious 21st century Silk Road. To be part of the Silk Road means to be part of a highway of trade. It’s like when the national highway crosses your property, the value skyrockets overnight just by being part of the highway.
“With creativity and a bit of entrepreneurship, you and your family can gain more, for instance, if you open a sari-sari store, a guest house, or canteen,” Siy said.