Last year, we reported that India’s Directorate General of Foreign Trade decided it had had enough of illegal mobile phones entering the country – especially after several unregistered devices were used to co-ordinate the gruesome 2008 terrorist actions in Mumbai. But it seems that the measures against these cheaply imported phones have not been working.
What’s the story?
Every mobile phone has an International Mobile Equipment Identity (IMEI) code. It’s a number embedded on the device that allows operators to identify the device whenever it makes a call across the network. The important thing here is that IMEI is on the phone itself – not the SIM. You can have a perfectly valid network SIM, but use it in a phone with no IMEI that you bought from a dodgy geezer down the markets. These grey market phones can’t be tracked on the networks, which is more of a problem than their status as illegally imported and non-taxed goods.
The major source of these devices is the so called “whitebox” market from China – a thriving industry where smaller manufacturers produce mass quantities of very cheap devices for sale (see our report). Not all of these devices are unbranded and illegal, mind you – some of them come from known entities like K-Touch and MicroMax. It’s just the ones manufactured without IMEIs that that are problematic.
What was the solution?
India’s response to the IMEI problem was to automatically block all devices without one from making calls or sending texts. While that seems like a pretty good solution, it has proven to be completely ineffective when dealing with the actual importation of grey market, white box devices.
“Shanzhai” is a Chinese term that refers to imitation or pirated electronic goods. It’s basically their word for whitebox. The proof that the IMEI ban didn’t work can be found in the record number of sales Shanzhai devices have enjoyed in the last year:
20 million unbranded Shanzhai phones imported in 2009
38 million unbranded Shanzhai phones imported in 2010
What we think?
How come the ban has failed so completely? BT Cellnet has claimed that 10% of all IMEIs are not unique, and that new IMEIs can be programmed into devices – that claim was made in 2002 though, so I’m not sure if it’s still a problem. Whatever the cause, it’s obvious that the security codes have not been effective in India. Maybe it wasn’t implemented properly by operators, or maybe the Chinese manufacturers have just figured out a way around it. The figures above were found on www.shanzai.com – a website dedicated to the Shanzhai device market. Here’s one more stat from the site: The Indian Cellular Association says that “today, approximately 3 – 3.5 million substandard mobile phones are imported into India each month”. The Indian thirst for mobile phones continues unabated.