This article first appeared in Digital Edge, The Edge Malaysia Weekly on August 22, 2022 - August 28, 2022

In January 2022, sales penetration of 5G smartphones surpassed that of 4G smartphones globally for the first time, according to global research firm Counterpoint Research’s monthly sales tracker. Who is buying these phones? Mostly consumers from China, North America and Western Europe.

This trend, which is enabled by advancements in 5G connectivity, foreshadows another: an incoming wave of old 4G smartphones and other equipment that will be retired and become e-waste. 

This will add to the already significant amount of e-waste in the world, which is expected to increase at a faster rate as technological cycles become shorter and products become cheaper. The United Nations’ Global E-waste Monitor 2020 predicts that global e-waste will reach 74 million tonnes by 2030 and become the world’s fastest-growing domestic waste stream.

Much of this waste is unaccounted for. In 2019, only 17.4% of the e-waste was collected and recycled. An estimated US$57 billion high-value materials were either dumped or burned.

Julius Lim, CEO and founder of CompAsia, which collects and resells used smartphones, hopes to make a difference. Since 2012, the company has been collecting used smartphones and reselling it to consumers. Malaysia is one of its most established markets. 

As the transition to 5G commences, Lim hopes consumers will consider buying second-hand smartphones or send their old phones to companies such as CompAsia to be resold or refurbished. 

“The demand for pre-owned devices has always been there, but supply has always been a constraint. That’s why, over the years, we’ve been going upstream more into the collection of devices. We run training and buyback programmes, as well as leasing programmes, where the smartphones are returned to us at the end of the lease,” says Lim. 

CompAsia operates in many Southeast Asian markets, including in Singapore, and it has offices in the US and the UK. The demand for second-hand phones is observed across all markets, Lim says. It is much like the demand for second-hand cars. 

Even as new smartphones are becoming cheaper, he believes the demand for second-hand phones will always be there. “In Southeast Asia especially, the government is encouraging more people to go online. You’d be surprised that there is still a large proportion of people who are not online in these markets. We provide an alternative to owning a brand-new phone and it’s much more affordable.”

The collection of used smartphones is the challenge. According to Lim, the upgrade cycle for technological devices globally is between 18 and 24 months. Consumers are often changing smartphones to get the latest models even if their existing phones still work. But they do not necessarily trade in their old phones. 

“We try to play our part by extending the lifespan of every device. This will reduce the amount of e-waste and new smartphones brought into the ecosystem. Not many people know there is value to their used phone currently, so that’s why we’re on this journey to educate them,” says Lim. 

The used smartphones sold by CompAsia are tested to ensure they are of good quality and covered by a warranty. Those that do not meet its criteria are sold to companies that refurbish devices. 

Interestingly, CompAsia is already selling used 5G smartphones on its platform. “We have some Apple and Samsung models that can support 5G. These are branded models, so it’s more expensive. But you can still easily save around 50% of costs compared to buying a brand-new phone,” says Lim.

The phasing-out of 4G smartphones will not be too immediate. The rollout of the 5G network will take time, says Lim, and the 4G network is unlikely to be retired anytime soon. 

This means demand for used 4G smartphones will still be there in Malaysia. Since CompAsia has a global footprint, it can resell the smartphones in different countries as well. 

Lim is excited to see this transition into 5G and hopes it will prompt consumers to trade in their old 4G devices. One way in which CompAsia is promoting the shift is by offering leasing or financing programmes for consumers to purchase new devices. 

“Instead of paying upfront, the consumer can pay the amount over a few months. At the end of the financing scheme, we give consumers the option to return the device if they want to upgrade to another device,” says Lim. This ensures that the old devices are turned in. 

CompAsia also partners with major brands such as Apple and Samsung and most telecommunications companies in Malaysia to run their trade-in programmes. 

According to Lim, the company sold slightly over half a million used devices last year. Across the group, he projects the revenues for this year to reach RM1 billion. His target is to sell close to a million used devices. 

“From the global perspective, it’s still a very small number. In Southeast Asia alone, over 100 million brand new phones are sold annually. We think there will be a lot more opportunities. There aren’t many organised and structured players like us in Malaysia, as the market is very fragmented,” says Lim. 

The company is expanding into Indonesia this year and plans to increase the range of devices it sells in Malaysia. “We are getting more interest and traction among consumers now, so that will help us expand our inventory. On the upstream side, we will extend our partnerships with more brands and shops to collect more used devices,” says Lim. 

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