Russian Economic Development and Trade Minister German Gref would like to hold a Russian-produced mobile phone in his hands.
Photo: Dmitry Dukhanin
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Govt Refuses to Scrap Mobile Phone Import Duties
A governmental commission declined on Wednesday to scrap import mobile phone duties, but agreed to lift the duties from several kinds of component parts. The decision was made after St. Petersburg-based partner of SonyEricsson and Nokia had promised to produce up to 4 million phones for the Russian market. Industry experts, however, are skeptical of those plans.
Market participants were expecting the commission on foreign trade protection to decide Wednesday to lift the 5 percent import duty on mobile phones, a move heavily lobbied by Russia’s major mobile phone retailer Evroset. The company argued that it would cut illegal imports.
The Russian mobile phone market was worth some $1.4 billion in the first quarter of 2007 with illegal imports accounting for up to 15 percent, according to J’son & Partners.
The commission, chaired by Economic Development Minister German Gref, declined to lift the duties but decided to give a boost to Russian mobile phone production. Kommersant sources report that lifting duties on component part imports was lobbied by Elcoteq which promised to produce 4 million phones a year in Russia.
St. Petersburg-based Elcoteq is a subsidiary of Finnish Elcoteq, an outsourcing firm which has contracts with communications giants such as Nokia, SonyEricsson, ABB and Philips. Elcoteq has been producing Nokia and SonyEricsson phones in St. Petersburg for export. The company is virtually the only mobile phone producer in the country as Russia’s Sitronics are manufactured in China and Taiwan.
Evroset’s co-owner Evgeny Chichvarkin told Kommersant on Wednesday that zero imports on mobile phones could have cut prices and protected the market from illegal imports. He sounded quite skeptical of Elcoteq’s plans. “They won’t manage to do it, you’ll see,” he said, adding that “labor costs in Russia are far too high compared to those in Asia.”
Other market experts say that Elcoteq’s plans are not significant enough to scrap import duties on component parts. “Four million phones a year is nothing,” says Vladimir Plyako, director general of the Tsifrograd retailer. “A typical order for a Chinese company is times higher.”
www.kommersant.com
All the Article in Russian as of June 28, 2007
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