By Jeph Ajobaju, Chief Copy Editor
Tecno sells more devices but Samsung makes more money with fewer sales in the battle between Chinese and South Korean mobile phone handsets to carve up the African market for themselves.
Samsung makes more money because its devices are priced higher, Techno and other Chineses products make more sales at lower prices.
Transsion brands – including Itel, Tecno, and Infinix – jointly dominate the feature phone makret with 64 per cent of unit shipments in the third quarter of 2019, according to figures from International Data Corporation (IDC).
The brands of the Chinese firm also lead in smartphones, 36.2 per cent of shipments, maintaining a trend since it first overtook Samsung as the continent’s top phone maker in 2017.
However, Samsung leads Africa’s phone market in money terms as its phones sell at higher prices. It has also raised competition with Transsion in the segment for lower-priced smartphones.
Samsung recorded a 61.4 per cent growth year-on-year with phones priced between $100 and $200 in the third quarter of 2019, which IDC says has “pushed Chinese brands to offer more affordable devices.”
But it may be difficult to upstage Transsion because of its exclusive focus on the African market, unlike Samsung.
Competition drives down price
Transsion has built its business over a decade by producing phones with locally-tailored features (including multiple SIM slots and camera technology calibrated to darker skin tones) from its manufacturing base in Ethiopia.
Its business premise and success in Africa resulted in a multibillion dollar Shanghai IPO in September 2019.
Quartz Africa Weekly reports that, ultimately, the tussle for market share among phone makers will lead to cheaper models and grow smartphone shipments.
IDC predicts the mobile phone market will reach 218.2 million units by the end of 2019 with smartphone shipments forecast to grow by 3.2 per cent this year.
But “feature phone shipments are expected to remain flat” with a meager 0.1 per cent growth rate.
Consumer spending also shows that lower priced smartphones (costing below $200) is a sweet spot for phone makers in Africa – phones in that price bracket represented nearly 90 per cent of all smartphone sales in the third quarter of 2019.
Transsion’s listing prospectus listed nine other phone brands selling well in Africa, five of those, with a combined 18.7 per cent market share, also had Chinese roots and were not just partners but brand owners and licencees.
Dominance of Chinese brands in African phone market
| 2018 | 2017 | ||
| Transsion (China) “Tecno” et al | 49% | 45.12% | 33.73% |
| Samsung (South Korea) | 10.27% | 12.85% | 16.29% |
| HMD (Finland) “Nokia” | 6.78% | 3.96% | 0.00% |
| Huawei (China) | 4.05% | 2.69% | 4.02% |
| TCL(China) | 3.75% | 4.22% | 4.24% |
| Condor (Algeria) | 2.42% | 2.61% | 2.11% |
| Mobicel (South Africa) | 2.25% | 1.70% | 1.73% |
| X-Tigi (China) | 1.65% | 1.23% | 2.00% |
| Starlight (Algeria/China) | 0.93% | 0.00% | 0.00% |
| Stylo (South Korea) | 0.89% | 0.46% | 0.02% |
Source: IDC
Aggressive inroads
Oppo and Vivo phones have made aggressive inroads into the African market in the past year.
Walk through Nairobi’s central business district on any day and both companies’ green and blue signs can be seen from down the block, balloon towers raised and music blasting from each stand.
Oppo gadgets are marketed heavily with one vendor claiming, “Oppo is currently selling better than any other brands”.
If a customer is not keen on Oppo, they are quickly directed to the new Vivo 17. But, when asked for the distinguishing features between the two brands there was little to be said.
The phones tote different names, but they essentially come from the same place and DNA. Vivo and Oppo are sub-brands of BKK Electronics Company, a private, multinational tech hardware company based in Shenzhen, China.
Nokia, one of the early dominant leaders in Africa with its simple feature phones, has lost ground here as it has elsewhere over the years. Nokia currently has 2.26 per cent market share in Africa and is licensed to Finnish company HMD Global.
A major portion of its research and development arm has moved to China.
Then there is “Alcatel-Lucent”, a Nokia spinoff whose phones are re-branded and used by other cellphone makers like Safaricom’s Neon. These phones are manufactured in China through a joint venture with TCL, a Chinese home appliance maker.
The TCL-Alcatel joint venture has 1 per cent share of the mobile phone market in the Middle East and Africa, but TCL brands have 3.75 per cent market share, second to popular Chinese giant, Huawei.
A growing number of Africa’s most popular phones are manufactured in China because, for years, Chinese firms have developed affordable smartphones for the market.
Cheap imitations upgraded
In China, many of the mobile phone makers started out as “shanzhai” manufacturers, a Chinese term indicating products made as cheap imitations of others.
Back in 2011, when cellphones were increasingly popular in China, but out of reach for those outside of China’s metropolises like Beijing and Shanghai, these “shanzhai” mobile phone makers filled a void that popular phones could not.
They developed simple and affordable imitations of the hottest products on the market. As they gained loyal customers in less traditional markets, they began to branch out and create products with distinct features that rivalled the very best.
But, as more “shanzhai” mobile phone makers grew in business, they hit walls at home. The market was saturated, incomes were rising, and consumer tastes shifted towards phones with better brand recognition.
These firms saw new promise in Africa and, through rebranding, “shanzhai” phones became the standard on the continent.
Oppo as example
Oppo is an example of this phenomenon.
In China, it is branded as affordable for the working class. In Kenya, Oppo hinges itself on its new Reno 2 that retails at $470 which targets the middle class.
The strength various Chinese makers bring to African markets is affordability. Some of their smartphones are priced from as low as $50.
This is why more expensive global leaders like Apple’s iPhone and upmarket Samsung models do no feature strongly in most African markets.
This price sensitivity is especially relevant as more people upgrade from feature phones to smartphones to use popular services like WhatsApp and Instagram.
Samsung, which has had a strong presence in most African markets with its feature phones, has lost market share overall as more users upgrade to Chinese smartphones.
However, as IDC data show, Samsung may be losing market share but it recorded 61.4 per cent growth year-on-year with phones priced between $100 and $200 in the third quarter of 2019.
In China, smartphone sales dropped 14 per cent in 2018. The two makers that saw significant growth, Huawei and Vivo, had already begun making inroads in Africa.
A clear signal for others to follow suit.