A survey carried out by the consulting firm Newzoo shows that Brazil has more than 109 million smartphone users. This makes the country a very interesting market for companies in the sector. But it could be more if the production process were different here.
Which is Gilberto Novaes seem to suggest. The executive is the founder of transitiona company that today works together with TecToy🇧🇷 For him, one of the factors that prevent Brazil from being more competitive in the cell phone segment is the logistics model CKD (Complete Knock-Down)🇧🇷
The acronym describes an approach in which a product does not arrive complete in the country, but in the form of component kits for the item to be assembled here. This strategy is standard in the national cell phone market, although it also exists in other industry segments, such as automotive.
According to Novaes, Brazil should adopt the SKD (Semi Knock-Down). At first glance, this model resembles the CKD, but has the difference of allowing the product to arrive in the country with pre-assembled parts.
Novaes explains that the SKD model would dispense with the obligation to produce intermediate components for the products, such as board modules.
For the executive, this stage makes the production process more complex and results in the generation of few jobs. In May, Novaes commented on this in the FIEAM🇧🇷
I’ve been saying for more than five years that the industry has to leave the CKD system, which obliges us to buy certain inputs in Brazil. We face overpriced values, lack of supplier options in Brazil and, many times, technological incompatibility, and this prevents us from launching our products.
Advantages for TecToy Transire?
Could it be that Novaes simply wants to create more favorable circumstances for Transire in the market, even more so now that the company is hand in hand with TecToy?
It might even be. Today, the company mainly manufactures card machines. As the TecToy name is better known, perhaps Transire will gain traction in consumer products. Among them would be cell phones.
But the fact is that the executive is right when he says that the Brazilian cell phone market could be more competitive. Brazil is the fifth largest in smartphone production. Despite this, we have few brands with a significant presence here, with emphasis on Samsung and Motorola.
Gilberto Novaes adds:
When analyzing the countries with the highest industrial production of cell phones, which are China, India, Brazil, Vietnam and Indonesia, Brazil is the one that presents the greatest barriers to new entrants.
The PPB [Processo Produtivo Básico] of cell phones in the country imposes the verticalization of processes in the CKD format, attributing greater weight to processes that require high investment, but with low aggregation of labor (employment generation).
This favors the formation of an oligopoly, since 94% of sales in the cell phone sector are concentrated in just five manufacturers. We could have much more employment and value generation with a change in this system.
In time, the first information about the union of TecToy with Transire appeared in April, but the relationship between both has existed for years. In 2015, when Transire was founded, the company rented facilities from TecToy to produce its first machines.