Transsion, the King of Mobile Phone in Africa Makes a Fortune in Low-profile

12 min read 

In a newly built office building in the technology zone of Shenzhen’s Nanshan District lies a plain-looking phone company.

This company has few Chinese users, yet it sold over 80 million phones worldwide, far more than Xiaomi and vivo.

The Shenzhen-based company named Transsion mainly targets the African market. According to the data of IDC, in 2016 Transsion’s phone brands were ranked first in Africa, with the total market share reaching 38%.

Big-name brands like Apple, Sumsung, and Huawei failed to capture as much market share as Transsion did in African market. A while ago, Huawei announced that it would launch low-end phones priced from 100-200 U.S dollars to increase sales and market share.

For a long time, Transsion has remained unknown in China or even in Shenzhen where its headquarter based.

In 2011, African Telecommunications Union (ATU) conference was held in Nairobi, the capital of Kenya. At the conference, not until Huawei employees were seated did they know the hit phone brand was also from China.

By 2016, Shenzhen government officials came to know that a Shenzhen-based phone brand had become a pacesetter in African phone market.

Transsion has never been known to the public until some Chinese media covered its story in 2017.

However, the past coverage on this company was mainly based on analysis and disclosed data, so this company remains mysterious. To dig deeper into this company, Jiemian News recently interviewed the company’s vice president—Arif Chowdhury.

March into the unknown territory

Transsion owes its current success much to its visionary strategy at the initial stage: avoid competing in the cut-throat Chinese market and choose Africa as its only target market.

“When our company was just founded, each of the emerging markets including China, India, and Africa as a whole boasts 1 billion potential customers and has large room for market growth.” Vice president Arif Chowdhury said. He is one of the company’s founders and took part in the company’s early decision-making. “After we chose the emerging markets as our priority, we needed to evaluate their potential by figuring out the market penetration of phones.” he continued.

According to a study of RoyceFund, in 2005, the penetration rate of phones in Africa only stood at 6%. By 2008, it went up to 30%; meanwhile, India and China saw more than 40% penetration rate.

“Nigeria, one of the most populous countries, is teeming with 200 million people; however, the penetration rate of phones only reaches 20%-30%, indicating a lot of room for growth.” he said, “Comparatively speaking, competition in African market is less fierce than that in India and China.”

In his view, the African market then was like Chinese market around 2000 during which supply could not meet demand. That provides a good opportunity for Transsion.”

At that time in China, the popularity of copycat cellphones was coming to an end. As more products in domestic market became available, the lacking in new phone projects, R&D capability, and systematic management of Chinese phone makers became prominent. Consequently, most domestic brands were in a dilemma.

Since 2008, Transsion decided to march into Africa and poured all resources into this new market.

When Mr Arif visited Africa for the first time, he confirmed his judgment: it resembles Chinese market of 2000, but this does mean Transsion could make easy money, because the roughness of the local market was beyond his expectation.

Nokia, at its peak in 2008, dominated the phone market share in Africa. No other brands could secure their footing in the second place. Local brands, European and American brands, and Chinese brands all joined the fray.

By then, numerous copycat cellphone brands entered Africa, aiming at making fast money. After they sold their phones in a region for two or three years, they moved on to another country to increase sales.

Nokia, a tech giant, also chose not to put much energy into African market. In its global blueprint, marching into African market seems to just make its presence felt; it only released some standardized, cheap and low-end phones to the local market.

However, these products failed to meet the demand of local needs. Mr Arif recalled that his immediate feeling about the African market is that local users’ demand for phones was extremely segmented.

Compared with advanced and unified European or American market, African societies are more divided. Each country has physical retail stores, agents, and franchisers; they do not have a uniform retail system. Phone users also have different requirements for phone makers, some love listening to music, some taking photos, and others long battery life.

It is clearly unrealistic for Nokia to allocate more resources into Africa to satisfy the segmented demand. Probably, it can only put 20% of its resources to symbolically grab its share there.

Transsion sees opportunities in Africa.

Not long after it entered the African market, Transsion debuted its product featuring dual SIM and dual standby functionality.

In 2008, mobile phones with such functionality were already popular in China, yet they were still novel to African market. Plus, they fit the local customers’ demand perfectly.

This phenomenon is decided by the situation of local telecommunications industry. “phone users will be charged dearly if they call via different telecommunications operators, so they tend to own more than one SIM cards.” Mr Arif said. “Due to insufficient stock, Transsion sold out all its dual SIM and Dual standby phones within a month.”

Afterwards, this kind of phones continued their momentum. According to an industry research company—Wireless Intelligence, a study released in November 2012 showed that over 700 million SIM cards were used by African customers, most of whom had at least two SIM cards. Informa, a market research firm, found in a study in 2012 that on average Nigerian people owned 2.39 cards per person.

After a smooth start, Transsion began to pour more resources into African market and unveiled more tailored products for local consumers. An OEM for Transsion commented, “Transsion was ambitious in African market.”

The media has reported the rest stories.

For instance, TECNO Mobile, a premium mobile phone brand of Transsion Holdings, launched the Camon series mobile phones, which have been hit products in Africa because they are able to detect the dark-colored face under dim light. This is a “killer” function whose selfie effect in night mode is way better than iPhone.

Besides, Transsion also released four-SIM-card phones and music phones with a big headset as a gift. These products, seemingly odd to us, solved exactly the problems of African consumers.

Now, Transsion has three different brands targeting different groups: TECNO, itel, and Infinix.

Among these brands, TECNO, with multiple categories ranging from feature phones to smartphones, is the first one promoted in Africa; itel targets middle market and low-end market; Infinix, which came out the latest among the three, mainly releases fashionable and high-end smartphones. These subsidiary brands covering almost all user groups earned Transsion fame in African market.

Glocal = Global + Local

The company’s staff like to summarize their market strategy as “Glocal”, which means the combination of “Global” and “Local”. In general, Transsion knows how to follow the general trend of phone market and tailor their products for local people.

Besides optimized functions such as “selfie” and “multiple SIM cards”, Transsion succeeded because it also invested heavily on channels and aftersales system, which is rarely known to the public.

“In the beginning, knowing that selling phones is lucrative, authorized dealers had full confidence in phone industry. Mr Arif said. However, they found it hard to stabilize their cooperation with cellphone brands and gain profits because local markets were too segmented.

So Transsion not only cooperated with local telecommunications operators but also with authorized dealers who felt the chill. By cooperating with authorized dealers, Transsion established retail networks in over 30 African countries and protected their interests.

Actually, this resembles what domestic phone industry experienced in the same period. After 2010, as subsidies dropped, the importance of telecommunications operators’ channel was undermined; in contrast, the number of open channels increased, lifting the status of authorized dealers.

“Our relationship with authorized dealers are virtuous: we need them to expand our market share; they hope to gain profits and follow the general trend of mobile phone industry via cooperation.” Arif said.

Other than that, aftersales service absorbed most of Transsion’s investment.

Chinese phone brands, such as vivo and OnePlus, all took their aftersales service and customer support as an important link in overseas expansion. Before official release, vivo has laid the ground work for many aftersales service center. Pete Lau, CEO of OnePlus, said in an interview with Jiemian that OnePlus would focus on building aftersales maintenance network.

Though many authorized dealers do business in Africa, few of them provide aftersales service. Generally speaking, the lifespan of a phone lasts two years, but it shrinks to several months due to a lack of aftersales service as users have to give up the phone once it is broken.

After Transsion secured its footing in Africa, it encountered similar problems. Some users voiced their concerns about customer support. To deal with this feedback, Transsion introduced aftersales service to help local customers.

“First, introduce aftersales service. Then, build up a platform for providing such service. Last, the aftersales service becomes a brand.” Arif said. “We have already built our aftersales service as a brand.”

The aftersales maintenance brand is called Carlcare which has over 1,000 professional networks covering Africa, Middle East, and East Asian countries. Our reporter learned that Carlcare also provides maintenance service for other phone brands and other electric appliances.

Arif said Transsion has invested over tens of millions of dollars to build up this platform since 2009. It even organized a specialized group for Carlcare, a rare phenomenon in phone industry.

With reliable aftersales service, Transsion launched more marketing offensive.

For example, in November 2016, TECNO announced it struck a deal with Manchester City FC whose team member—Yaya Touré enjoys great popularity in Africa and whose controlling stockholders have Arabian royal family background. The cooperation further improved TECNO’s prestige in Africa and Arabian region.

These measures raise Transsion’s reputation in Africa. Among African consumers’ favorite 100 brands released by African Business in 2016, TECNO is ranked 14, surpassing Coca-Cola and Microsoft; itel is ranked 25, higher than HP and Google; Infinix, in its debut of the list, is ranked 37.

Now, Transsion has 4000 employees in Africa; it even constructed a factory in Ethiopia. It is a large-scale project.

An insider once described: in Africa, especially Sub-Saharan Africa, TECNO logo can be seen everywhere whether in self-employed stores or shopping malls, outdoor ad boards or TV ads.

Expand into India

When Transsion became famous in Africa, it reached the ceiling. “It’s hard to top 45% for any cellphone brand in a regional market because of multiple choices consumers have. So Transsion may sustain the market share but will find it difficult to make breakthroughs.” Sun Yanbiao, the director of N1 Mobile said.

As a result, Transsion has to tap into new markets.

Since the second half of 2016, Transsion entered India. Different from Africa, India is a cockpit for Chinese phone brands. There, the company faces a similar environment like China.

In August 2010, Huawei precede other Chinese phone brands into India, followed by Xiaomi, OPPO, Meizu, OnePlus, Lenovo, and Gionee. These brands bringing operational experiences with them established “turf” overseas.

According to the data released by IDC in May 2017, in the first quarter of 2017, Chinese phone brands’ market share reached 51.4%, increasing by 16.9% over the last quarter and 142.6% year on year. Among the top five phone makers in India, four are from China, including Xiaomi, vivo, Lenovo, and OPPO.

“The competition in India has turned white-hot, if we do not enter the market now, the door will be closed to us permanently, given that smaller brands have few chances to survive two or three years later.” Arif said.

The past success empowers them to explore a new market. Thanks to the improvement of resource-allocation ability and strong supply chain, Transsion can supply other markets with products on top of ensuring normal operation in Africa.

Transsion needs to overcome obstacles just like when it encountered Nokia in Africa, yet it cannot replicate the experience in Africa. Accordingly, Transsion must change to grapple with the incoming challenges.

One major difference is the popularity of 4G network. India is much more superior than Africa in terms of 4G, so Transsion needs to launch 4G mobile phones to improve the positioning of products.

Now, Transsion works with Spice Mobility and released Spice series targeting young users. This brand owns some fashionable smartphones designed for youngsters.

Different from Huawei and Xiaomi which replicate their strategy in China and launch high-end products, Transsion still targets the middle and low-end market, the same strategy adopted in Africa.

Customers’ consumption habits also warrant attention.

“In India, people are more close to each other, so brand reputation is of utmost importance. A product’s quality, good or bad, will be known to the user’s friends and relatives pretty soon.” Arif said.

To this end, Transsion hired many local people for marketing. In Arif’s view, local employees for marketing can help Transsion blend into the local market. This is different from their experience in Africa.

Apart from Indian market, Transsion also aims to explore Southeast Asia and Latin America. Arif said his company also planned entry into Indonesia, Vietnam, Columbia, and Mexico.

Transsion has not considered returning to Chinese market yet.

An insider believed that Transsion had to adjust the general strategy of they were about to return to domestic market full of complicated and intense competition. Accordingly, Transsion does not intend to be back in China, at least in a short term.

Sun Yanbiao said that it was not a good time for Transsion to return to domestic market. “Transsion focus on the R&D of feature phones all the time; it may not catch up with domestic market where main players compete for making high-end smartphones.” he continued.

In the past, Transsion made great fortunes when numerous cellphone brands compete fiercely in domestic markets. Currently, holding on to a regional market is not promising over a long period of time. Transsion— “the King of Africa” will face more serious challenges and greater opportunities.

This article originally appeared in Jiemian and was translated by Pandaily.
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