Who benefits when smartphones get cheaper?

 Smartphones are now essential and government support can help lower-income Malaysians get connected. But such support should be consumer-led and brand-neutral.

From Liew Li Xuan

When Malaysians think about smartphones, they usually think about the brand first — Apple, Samsung or Xiaomi. Behind these brands is a network of retailers that brings their products to consumers.

Asia Mobile Retail, an authorised Xiaomi retailer in Malaysia, is one example. Like other physical retailers, it has to pay for stores, staff, stock and customer service. It also gives customers a place to see and try a phone before buying it, while providing support after the sale.

Yet these retailers face a growing challenge: how can they compete when consumers can often find the same phone at a lower price online?

A customer might walk into a store, try a phone and ask a salesperson for advice, only to find it is RM50 cheaper online. The retailer has paid for the store, staff and service, but another seller may get the sale.

This does not mean online shopping is bad. In fact, online competition has made it easier for Malaysians to compare prices and find better deals. If an online business can sell a phone at a lower price because it operates more efficiently, consumers should benefit.

But there is a difference between healthy competition and an uneven playing field.

Physical retailers have costs that online sellers may not have. At the same time, online platforms can also impose commissions, fees and contractual conditions on sellers. These costs can affect how businesses compete and what prices they can offer.

This is why the issue deserves attention from policymakers.

The Malaysia Competition Commission has already looked at concerns in Malaysia’s digital economy, including marketplace commissions, contractual terms and pricing transparency. These issues matter because the way digital platforms operate can affect smaller businesses and their ability to compete.

The answer, however, should not be to protect physical retailers from online competition.

If an online retailer can offer a better price because it is more efficient, it should be allowed to do so. Consumers should not have to pay more simply to keep a physical store in business.

But physical retailers should not be placed at a disadvantage either.

A retailer that invests in a showroom, employs sales staff and provides after-sales service is offering consumers something beyond the product itself. Policymakers should therefore ensure that businesses competing through different channels are not put at a disadvantage by restrictive contracts, unclear fees or unequal access to products.

The same principle should apply to government efforts to make smartphones more affordable.

For many Malaysians, smartphones are no longer a luxury. They are needed for education, work, online banking and access to public services. Government support can therefore play an important role in helping lower-income Malaysians get connected.

But support should be consumer-led and brand-neutral.

If the government provides a smartphone subsidy, consumers should be able to choose the brand and retailer that best suits their needs. The policy should help people buy a phone, not quietly decide which company gets the sale.

This is important because the smartphone market is no longer simply about shops competing with shops.

A customer might discover a phone on social media, compare prices on an e-commerce platform, visit a physical store to try it and then buy it somewhere else. Online and physical retail are now part of the same market.

For retailers such as Asia Mobile Retail, the challenge is therefore not simply to compete with other shops. They are competing across an entire system of manufacturers, telcos, platforms and online sellers.

Malaysia does not need to choose between physical retailers and online platforms. It needs to make sure that both can compete fairly.

That means allowing businesses to offer lower prices when they genuinely become more efficient, while addressing practices that can put competitors at a disadvantage.

Consumers should benefit when smartphones become cheaper. But price should not be the only measure of a healthy market. Consumers also benefit from having places where they can see products, receive advice and obtain support when something goes wrong.

If physical retailers disappear, consumers may eventually lose some of those choices.

The goal, therefore, should not be to protect every retailer from competition. It should be to make sure that businesses that provide value can compete fairly, whether they sell online, in stores or through both.

Cheaper smartphones are good for Malaysians.

But the best outcome is not simply a cheaper phone today. It is a market where consumers continue to benefit from competitive pricing, genuine choices and reliable service tomorrow. - FMT

Liew Li Xuan is a youth advocate and an FMT reader.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.