Crazy Idea but Hear Me out

All Blacks NZ on 10/08/2015 - 16:25

Hi guys,

I have bought a couple of Chinese phones over the last 2 months. They are still to arrive but it does feel like they are great value for money. I have been reading a lot about them and most people have had good experience.

This got me thinking that what if those specs are available in Australia from an Australian brand with local warranty. Obviously the price will be a little higher but it won’t be similar to Samsung or Apple etc. Now I understand that these phones may not be at the level of Samsung/Apple but they are getting close.

I am thinking about Doogee F3 (Obviously different name), http://www.doogee.cc/products_detail/&productId=116.html.

Now this phone has 2.5D glass, octa core CPU, 3 GB ram, dual sim, micro SD card, a Samsung 13 MP camera and many other things. It retails for around AUD $240. If it was available through an Australian reseller with Australian warranty and a better name what would you be willing to pay for it?

Some of the benefits to buy an Australian branded version:
- Local 12 months warranty
- Quick delivery after purchase
- Unlocked phone
- Quick software updates as there won’t be any carriers involved. R&D most likely will stay overseas.
- Accessories in stock for specific phone

I am quite interested to explore this idea and see if anyone else has done it or interested in it. I would appreciate any ideas/comments/feedback or if you think it’s a stupid idea and won’t work.

Thanks

Mobile

Comments

  • spackbace on 10/08/2015 - 16:52
    -1

    I am quite interested to explore this idea and see if anyone else has done it or interested in it. I would appreciate any ideas/comments/feedback or if you think it’s a stupid idea and won’t work.

    So to have Aussie warranty, you'd need to produce it here. Now you're looking at:

    • Much higher labour costs
    • Much higher rent
    • Shipping costs for the parts that are available locally in HK
    • GST

    Then you need to factor in warranty costs on each phone. Ie for every 10 phones, 1 might be a dud. This means you have to replace the phone, leaving you out of pocket ~$200. Divide that amongst the other 9 and they're ~$20 more expensive.

    There's more to it than all that, but there's a good summary of why it's a bad idea

    And to put it another way, why do you think most manufacturing is going off-shore. Look at the car industry for example. Unions = higher wages = lower margins = may as well build off-shore

    • 18 on 10/08/2015 - 17:17
      +5

      Why do you need to produce it in Australia in order to have Australian warranty? He is simply a retailer, not manufacturer.

      • spackbace on 10/08/2015 - 18:03
        +5

        Ah yeah. Ah well it's Monday, I'll let the post stay and gather negs :)

        • 18 on 10/08/2015 - 18:06
          +1

          ahah nevermind bro, ill +1 it :)

  • pointless martyr on 10/08/2015 - 17:16
    -5

    Youd have to be smoking doogees to come up with a scheme like this.

    An aussie phone manufacturing company.

    LOL.

    Youd have to charge a couple of grand per unit i reckon, and it will probably be made from cereal boxes and sticky tape

    Hmmm… Iphone, samsung or doogee?

    Give this man a prize for the funniest post of the month.

    • All Blacks NZ on 10/08/2015 - 18:52

      User name checks out. Lol. I am taking about outsourcing R&d and manufacturing offshore. Just give it an Australian brand name and import it before selling.

      • pointless martyr on 10/08/2015 - 19:16

        Haha yeh i just followed on from Spackbase.

        I wish i could neg myself

  • mskeggs on 10/08/2015 - 17:34
    +5

    I think this actually a very good idea.
    Basically, doing what Kogan is doing but with more of a focus on phones.
    See this: http://www.bloomberg.com/news/articles/2015-07-13/how-1-000-…

    Certainly worth exploring further.

    • All Blacks NZ on 11/08/2015 - 09:56

      Yeah I know the Kogan story, so this idea is nothing new. Thanks for the link to the article.

  • PVA on 10/08/2015 - 17:36
    +1

    one thing to watch with cheap phones that look good are that the 4G bands usually are very limited.
    And I dont think updates are very timely, even if they are carrier unlocked.

    I think $240 would end up more than $500 when you add taxes and pay for support/warranty, there's already some chinese makes in that range like Oppo.

    The phone looks OK. What's HotKnot - is that NFC?

    • All Blacks NZ on 11/08/2015 - 09:56
      +1

      Thanks for your reply. The new Mediatek chips can have all the Australian bands. The problem with current Chinese phones is that they are made for Chinese market and they don’t care about Australian bands. If I can get them to make a specific phone for Australia, I can request the bands that works for us here. I have a lot of research to do in regards to cost to manufacture and then costs associated to brining it over here.

      Hot knot is Chinese version of NFC. It actually uses Bluetooth rather than actual NFC chip.

  • Vampyr on 10/08/2015 - 18:24

    It's both sad and reassuring when you come up with a good idea that's already been done.

    • All Blacks NZ on 10/08/2015 - 18:54

      Fair enough. I am not inventing the wheel but other than Kogan, is there another Australian company doing it? Sure the Chinese are gonna try and sell their phones here just like they are doing with cars etc

  • Davo1111 on 10/08/2015 - 18:33

    They are still to arrive but it does feel like they are great value for money.

    errr not so good start.

    All the major telcos have been doing this for years.

    Examples

    Telstra mobiles are rebranded ZTE mobiles
    Vodafone are selling alcatel and in the past have rebranded Huawei mobiles.

    Even the old mobile brand "3" rebranded chinese phones.

    • All Blacks NZ on 11/08/2015 - 09:57

      Yeah, I used to work for a Telco and know most of their own phones are rebranded ZTE etc. I am doing my research right now and I am sure this will be more than a year long process if I actually decided to go ahead and spend money on it. Right now, I am just looking for feedback.

  • RockyRaccoon on 10/08/2015 - 18:46

    They are still to arrive but it does feel like they are great value for money

    Wouldnt it be a good idea to wait to see if they are actually that good.

    No many successul entrepreneurs make money out of products they sell based on feelings without seeing the goods

    A lot of cheap overseas product are either

    1. Great value
    2. Average
    3. Poorly made
    4. Down right dangerous

    Then there is the documentation.Chenglish at best?

    And why would they sell to you? There are thousands of established importers who already understand how to pay for and promote overseas goods,

    Do you understand terms like Letters of Credit FOB etc?

    • All Blacks NZ on 11/08/2015 - 09:57

      All valid points and thanks for your input. The documentation is all in English from what I can see in online reviews etc for other Chinese phones. Most of these Chinese manufacturers are just that. They are not good at marketing other than the brands we know like Oppo, One plus etc. If I have got the money to buy their product, I don’t see how I would be any different from any other customer these OEMs have. I was doing some research and found that most of the OEMs actually provide R&D now as well. So the mobile phone reseller will only need to market the phone. The rest is all done in house.
      In regards to importing etc, I do have a degree in International business and kind of feel useless when I am trying to apply it in real world. As I said before I have lots to learn and lots of research to do. If nothing comes out of this at least I will know everything there is to know about making a phone and importing it.

  • richard1912 on 10/08/2015 - 19:01

    You can do it but it will be a lot of work and you will need a bunch of capital (money) before you can start.

    Do a shit ton of research first. If you lose interest then u never had the dedication to make it work anyway.

    Thing to remember that a great business idea is only 1% of the picture. The execution is what really matters and where all the work is.

    My 2cents, good luck!

    • All Blacks NZ on 11/08/2015 - 09:57

      Thanks for your reply mate. In regards to capital I have enough to start off with about a thousand phones and then reinvest the capital. This was only an idea but now I am going to dedicate a lot of time and effort into try and make this work.

  • plmko on 10/08/2015 - 19:44
    +1

    If you're good with software then you may succeed making a local phone that caters to the functions of our needs. Hardware is just half the story, and the real reason why the majority don't switch from major brands.

    • All Blacks NZ on 11/08/2015 - 09:58

      I am not a pro but I am learning how to make an app for Android phones. I know how to root phones, install custom roms etc. But I am not a developer. I will need to hire someone to do that or possibly outsource that. I haven’t put too much thought into that but it’s on my to-do list.

  • nuggetbro on 10/08/2015 - 23:56

    There are some issues with your assumptions but i believe it is worth investigating.

    There are a few threads to keep an eye on with chinese phones. 1 is that they lie a lot. E.g. 3000mha sony battery = 1800mha no name. 13 mpx camera = 8 mpx. Not an issue for someone in china but i imagine it cause you issues if you sell something that isnt as described.

    1. Is software is always terrible. Any phone that is around rhe 200 mark is going to have bugs. I must have spent days on xda and whirlpool reading with bug after bug. Then the manufacturer gives up on a model and moves on.

    To be honest i think it could be an amazing idea if done properly.

    You could rebadge your own brand.

    You could invest portion of profits into further development of your models.

    You could offer apple like warranty where people can swap and if they break it they can swap for a smaller fee.

    • All Blacks NZ on 11/08/2015 - 09:58

      Thanks for your reply and some amazing ideas. I am aware of the issues about dodgy specs. It’s getting better now compared to say 12 months ago as the Chinese are selling more phones overseas. The specs will have to be exact oterhwise that’s all it will take it damage the brand name and make this whole thing fail.
      The issues regarding software is that most of these guys are trying to put too much in the phones. There is malware etc as that’s another way of making money for these guys. I rather than a stock standard android like nexus line and then the updates will be nice and quick. People can always put customer launchers etc.
      The other issue is that these companies are releasing “Flagship” phones every 2 months and it leaves a very bitter taste in customer’s mouth. I will only focus on about 2 models a year and keep the software updates and support going long time after that. This is still work in progress.
      The goal is definitely to have R&D in house in Australia in 2-3 years and still outsource the manufacturing.
      I will need to do more research on the warranty apple provides but thanks for the suggestion. Sounds like a good idea.

  • Japius on 11/08/2015 - 07:56

    I think if it wasn't too expensive it could work. I am looking at grey importing a phone at the moment and what annoys me is the shipping times. If they were physically in stock in australia and I could pay for express postage to get it the next day and/or pickup same day if nearby I would pay a higher price than waiting the 5-10days quoted on many grey sites.

    However, many chinese phones miss some australian frequencies and bands so you would have to make sure you made it clear which networks and frequencies your models supported.

    Come to think of it, I wouldn't mind a grey importer that simply held stock in australia….rather than an aussie version of a chinese phone

    • All Blacks NZ on 11/08/2015 - 09:58
      +2

      Thanks for your reply mate. I can definitely see where you are coming from. The phones I ordered are still about a month away and I paid for them about a month ago. There are a lot of pre-sells where we are basically paying these Chinese OEMs before they even have a prototype in hand. Looking around the web and different stores that sell Chinese phones, there are massive pre-order numbers.
      I thought about just being an importer of theses phones but then I thought it wouldn’t cost too much to get them rebranded to whatever I want as these guys are basically OEMs. This way I can have a brand presence and people will know what to expect over time.

  • iridiumstem on 11/08/2015 - 08:11

    One of the problems I see with making a Chinese phone and selling them as a local stock is, how they tend to ignore the copyrights. Xiaomi tried to sell their phone in India and Sony Ericsson sued them to stop them etc etc. I've heard that in many cases, if Chinese companies start selling a phone abiding the copyrights law, they will be at a serious loss.

    How would that work for you?

    Also, from my knowledge, Australia is not exactly the business friendly place. The population density is too low in my opinion, freight cost is high, etc etc. After counting all that in, wouldn't the price go up too high?

    • All Blacks NZ on 11/08/2015 - 09:58

      Yep. All valid points. Haha. I am making a list of all the possible barriers/objections/problems and will look for solutions one by one. In regards to copyright, the biggest issue is copying design. I am not sure about patent situation and how that works. Android takes care of most of it and hardware manufacturers also cover some of them. I will need to do a lot of research in that area as well.
      In regards to market in Australia, I think it’s big enough for something like this. I am looking to sell a couple of thousand phones a year and at reasonable RRP. But again, I am going to have to make a proper business plan to make sure it’s going to be feasible.

      • iridiumstem on 11/08/2015 - 10:08

        I wouldn't say the design is the main issue, since almost everything on the phone is pretty much patented in one way or another. That whole patent area is messy.

        I know there are a lot of "parts cost like $190 and they are charging $1,000" sentiment here. That said, even after taking marketing costs and R&D costs, smartphones are not just a simple sum of the parts. Of course, there are certainly mark-ups here and there, but it's not as massive as we see them to be is my point. Software support, services and warranty related cost, etc etc, the costs will be higher than you think. Chinese phones cost like $200~300, since they don't have any of the R&D costs, marketing cost and they survive on little to no profit (sales volume is high), can you do something similar in Australia? That is my question.

        If your phone is priced over $400, you will be competing against local Samsung and Apple stock as well as Chinese imports. If it is priced similarly to Chinese vendors, with that kind of expected sales volume, I don't think you can keep the business afloat.

        It's just my 2c.

  • All Blacks NZ on 11/08/2015 - 10:04

    Thanks so much for the reply guys. There are a lot of valid points you have raised and I knew it wasn’t going to be a walk in the park otherwise everyone will be doing it.

    I am really amazed by the level of knowledge and effort you guys put into this forum.

    Please feel free to reply and tell me how this will fail as that will become my areas of focus for research. I am going to India early next year and I might have to spend a couple of weeks in China by the looks of it.
    If anyone else is interested in this or has knowledge of Android development etc., I am keen to hear from you. I have enough capital to get me started but will definitely need expert advice.

    Thanks

  • Baysew on 11/08/2015 - 10:44

    I think one of the key things is to think up a really great Australian brand name for the phone.

    • spackbace on 11/08/2015 - 10:57

      See You Next Tuesday Telecommunications?

  • mskeggs on 11/08/2015 - 17:49

    I think if you are going to do this, keep it simple.
    Straight Android, no upgrade support.
    Online customer support only.
    Your target market is not phone hackers or people who can afford a flagship phone, it is cheap skates who want a 'good enough' smartphone.
    Focus on really good distribution, so if you get an order before midday, it goes out express post that afternoon.
    I can buy a china phone today cheap enough. The advantage you can offer is fast delivery and local warranty.
    Streamline everything, minimal models, minimal options.
    Free warranty returns and fast replacement.
    Can you make a profit with GST, postage and other costs?
    I suspect you sale price needs to be under $150, considering Kogan does a 3g quad core 1gb/8gb 5" for $129 + delivery, and a similar spec on geekbuying is $106, you can probably only expect around $25 gross margin per device.
    If you shifted 1000 phones in the first 3 months, which means selling and shipping 16units every business day, you probably have a viable business. I think you would have to factor in quarterly visits to China to keep the new model pipeline going, i doubt you could rely on getting new prototypes shipped here for review - better to be on the ground so you can test a dozen options in a week and make a decision there and then.

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