How Chinese smartphone makers compete with Samsung and Apple in overseas markets
In Africa, the company that rules the continent’s vast mobile phone market is neither Samsung Electronics or Apple, but a little-known Chinese manufacturer using micro innovations to meet the demands of locals.
Transsion Holdings, a Shenzhen-based phone maker, has captured more than 40 per cent of the mobile market in sub-Saharan African countries by offering headset features designed for local needs.
To name a few, they include smartphones with four SIM cards slots – a design that helps users save money by avoiding out-of-network calls – long standby feature phones with a battery life of up to 15 days to avoid the inconvenience of charging phones in Africa, and camera technology that brings out the best in darker skin tones.
“We listen to the needs of Africa,” said Arif Chowdhury, vice president of Transsion, attributing the company’s success on the continent to a strategy of “think globally, act locally”.
Selling under three major brands – Tecno, itel and Infinix – Transsion is already Africa’s top mobile phone player with a portfolio of products priced from US$15 to US$400. The company saw shipments surge to 80 million units in 2016 from 50 million units the prior year, significantly outpacing the entire phone industry in Africa.
Founded in 2006, Transssion aims to become a Chinese brand that can thrive in overseas markets by “providing quality products with affordability”, said Chowdhury. It is the same goal shared by an increasing number of Chinese smartphone makers.
The top five Chinese smartphone vendors – Huawei Technologies, Oppo, Vivo, ZTE Corp and Xiaomi – captured about 29.6 per cent of global shipments in the first quarter of 2017, compared with 17.7 per cent in the same period in 2015, according to Counterpoint Technology Market Research. During the same time frame the market shares held by Samsung and Apple have declined, despite retaining their respective positions as No 1 and No 2 in the world.
India is the latest battlefield for mainland smartphone vendors with global ambitions. Chinese brand smartphones together made up more than half of the country’s sales in the first quarter of this year, compared to only 15 per cent a year earlier, according to an earlier report by India Rating & Research.
Chinese brands haven’t been able to establish themselves in developed Western markets, but no one can underestimate the importance of developing markets.
Most of the world’s smartphone shipment sales growth of 11 per cent in the first quarter was driven by only a few geographies, such as India, the Middle East and Africa, according to Counterpoint Technology.
“Many people used to see Chinese smartphone makers as copycats. But the situation has changed a lot,” said Jin Di, research manager at IDC China.
“On one hand, they have been working on innovation to improve the quality of products. On the other, a lot of effort has been made to improve their brand images,” she added.
To shed its cheap image, China’s Huawei has since 2013 held its annual product launches in London. It cooperated with Porsche Design to work on limited edition designer phones and signed Argentinean football star Lionel Messi as a brand ambassador in 2016 in a deal reportedly worth US$6 million.
Richard Yu Chengdong, chief executive of Huawei’s consumer business group, even has a timeframe in mind in terms of challenging Samsung and Apple’s leading positions. Huawei, the No 3 smartphone vendor in the world, is eyeing to take Apple’s No 2 position in 2018 and the top spot from Samsung by 2021, Yu said at an event in 2016.
IDC’s Jin said Samsung is expected to feel the most pressure as Chinese brands venture outside their domestic market in search of more growth. “Because of Apple’s unique iOS system, at this stage it is difficult for Chinese brands – all of them are Android phone makers – to bring significant challenges to Apple,” she said.
For Transsion’s Chowdhury, whether or not one smartphone brand can become world leader lies in “the kind of innovation it can bring to the market”.
“Mobile phone is a fast moving business. One day in [this] business is like one-year in other businesses. Anything can happen as long as you can keep innovating,” he said.
After successfully establishing itself in Africa, Transsion has targeted India as the next frontier for global expansion. “We have found that Indian people prefer to do selfies after sunset when they finish work. So we have developed a new technology that can bring the true Indian skin tones to the photos even in low light after sunset,” he said.