People in China are buying fewer smartphones. So how can Chinese smartphone makers keep growing? By looking to a whole new continent: Africa.
Xiaomi says it's launching a department in Africa headed by its current vice president. While the company has been selling phones in Africa since 2015 through local partnerships, this branch marks its official venture into the area.
While China's smartphone market might be saturated and competition fierce, interest in smartphones is growing across African countries, some of which are still dominated by feature phones.
Another reason for Xiaomi to be optimistic: Where Western markets tend to sell phones via carriers, IDC's Simon Baker tell us that in Africa most phones are sold on the open market.
But Xiaomi aren't the first Chinese company to think of heading there. Chinese smartphone makers are already big across the continent, thanks to a brand you probably haven't heard of: Transsion. The Shenzhen-based company doesn't sell smartphones on its home turf, but surpassed Samsung as the biggest vendor in Africa, accounting for 35.4% of smartphone shipments in the second quarter of last year.
Baker says Transsion’s three brands, Tecno, Infinix and itel, all have strong holds on African consumers because they offer a range of competitively-priced phones. A recent Tecno smartphone, the Camon 11, has an AI-enabled 16MP front camera and dual rear cameras, face unlock and a notch -- for just US$156.
Xiaomi is famous for making cheap handsets -- even though recently it’s been trying to move to the higher-end and sell more expensive, fancier phones. That doesn’t mean it’s given up on cheap phones -- it just spun off a separate brand named Redmi, which will focus on making lower-priced phones. The first Redmi phone launched in early January packs a 48 megapixel rear camera and a mid-range Snapdragon 660 chipset for just US$145.
But in Africa, it faces other challenges too. IDC’s Baker told us that African consumers have limited spending power, while richer consumers in major urban markets are already seeing some saturation.
And Xiaomi will probably also need to deal with another domestic arch rival too: Huawei. At home, Huawei’s Honor is going head to head with Xiaomi. And in Africa, Huawei is already third in smartphone market share, behind Transsion and Samsung.