Do we pay more for tech in SA?

South Africans typically feel hard done by when it comes to purchasing tech products locally, but importers say that the differences in pricing may not be as large as we think.

Tech retailers and distributors such as Incredible Connection, Hi-Fi Corporation and Esquire, who import tech and electronic goods from overseas, previously weighed in on how the fluctuating rand value impacted their businesses.

While the rand’s volatility plays a big role in the cost of bringing goods into the country (and subsequently its price-point to consumers) – there is more at play in the process.

JD Group

As holding company for Incredible Connection and Hi-Fi Corporation, the JD Group is one of the biggest tech importers in South Africa.

When comparing local versus international prices, the group said that there is a lot closer pricing parity than many people may believe.

“Because South Africa is often grouped under European territories, when it comes to tech products, it is important to look at prices in Europe when making comparisons, and not the US, as they are very different markets,” the group said.

JD Group added that when it comes to pricing tech in SA, duties, freight and other applicable taxes are also taken into account.

Through aligning with “strategic suppliers” and buying in large volumes, however, it is able to remain competitive on pricing.

“We conduct competitive shop-outs (where we do competitor pricing analysis) and we keep the customer at the centre of everything of we do,” the group added.

JD Group said that import taxes and duties are important for the development and growth of the economy and, if applied correctly, could help stimulate local industry.

“Having said this, it is very important that the consumer is able to purchase a product at the best possible price in the market, taking into account international pricing trends,” JD Group said.

Esquire

Lifestyle-focused IT distributor, Esquire Technologies, also believes that the price of technology in South Africa is in-line with the USA and European markets.

“In the USA, if you buy a product for, say, $39 US dollars you still have to pay an additional general sales tax at the till. In South Africa what you see is what you pay,” Esquire said.

“In fact, our local retail price is cheaper than Singapore and China. The only countries which offer cheaper ICT products are Hong Kong and Dubai – and that is because there are no duties taxes charged there.”

Esquire noted that prices could sometimes reflect a 3-5% increase, depending on factors such as method of import (via air or sea), or market season. “You pay a premium during the high season, which we are in right now,” it said.

In terms of duties and charges, Esquire said that South Africa is on par with the rest of the world. “In fact, we are pretty price competitive when compared to countries such as Australia and India.”

“IT products, like keyboards, mice and motherboards, attract zero duty. Duty is only essentially charged on products which are deemed to be luxury products, such as iPads, TVs – where an ad valorem tax is paid,” Esquire said.

On top of the fluctuating value of the rand, Esquire said noted that the ad valorem duty [http://en.wikipedia.org/wiki/Ad_valorem_tax] paid on products – such as MP3 players, Apple iPads and digital cameras – also impacts pricing.

“Products with plastic content are also more expensive – because the duty payable is higher. There are sometimes also ICASA costs for wireless products and then NERSA charges a small percentage on all products,” the retailer added.

“Many distributors absorb these costs – or try to absorb them. Esquire generally absorbs them.”

To stay competitive in the local marketplace, Esquire said that it keeps its profit margins lower than its competitors.

“As a lifestyle-focused IT distributor, we are trading in a volume-driven market,” it said.

Quick-look at pricing

BusinessTech pulled the pricing of three tech products sold globally – the consistently-priced iPad, a notebook and an LED TV – to gauge how these specific prices compare.

 

Product SA Price UK Price (RRP)
US Price (Excl. VAT)
iPad with WiFi + Cellular 64GB R8,799.95 £659.00 (R8,824.59) $829.00 (R6,848.81)
Samsung 550P i7 R10,999.95 £749.00 (R10,016.60) $899.99 (R7,435.71)
LG 55LM5800 LED 3D TV R29,999.99 $1,799.99 (R14,871.62)

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Do we pay more for tech in SA?