Company

Why did Transsion become the Apple of Africa?

A Chinese mobile phone company, which has had more than 50% of the African market for the past five years, is now seeking to become the apple in the African market. But most Chinese have never heard of its business story.

Quick question: Which is the fourth largest mobile phone manufacturer in the world by shipments?

I rule out a few wrong answers for you: Apple, Samsung, Huawei, Xiaomi, OPPO.

The answer is Transsion.

You may never have heard of this brand, although it comes from China, yet most Chinese people have never heard of it just like you. Because it has a very strange business story.

Transsion is a brand from Shenzhen, but it sells mobile phones almost exclusively in Africa. And over the past 13 years, its main products have even been non-smartphones.

The five largest smartphone brands by shipments in 2019 are Samsung, Huawei, Apple, Xiaomi and OPPO. But if non-smartphones are included, Transsion ranks fourth, selling 10 million more phones than Xiaomi, a well-known Chinese smartphone maker.

In 2019, it accounted for 8.1% of the global mobile phone market. But it ranks first with 52.5% of the African market. It has three mobile phone sub-brands TECNO, itel and Infinix, all of which are listed in the Top 100 list of the most loved brands by African consumers published by African Business, a well-known African business magazine. Among them, the main brand TECNO ranks fifth.

According to some rumors, if you walk in some cities in Africa wearing clothes emblazoned with the TECNO logo, someone will take the initiative to say hello to you. It’s like you see an Apple Genius on the street.

Although you may have read about the company in some financial news (or never), believe me, those reports are very incorrect.

Let’s explain in detail why a Chinese manufacturer of backward mobile phones has become the Apple of Africa.

Why Transsion is popular with African users?

Before we talk at length about the origins of Transsion and its mobile phone brand TECNO Mobile, let’s talk about how the brand has been successful in the African market.

Although I will talk about many product details next, I can make a conclusion first:

For a long time, no mobile phone brand in the world has focused on making phones for the African market.

You can quickly recall that Apple designed products based on the needs of users in Europe and the United States, Sony designed products based on the needs of Japanese users, and Huawei designed products based on the needs of Chinese users.

When it comes to the African market, these manufacturers simply shrink the performance and software to almost unavailable to produce a phone that is affordable to African users.

But this is not the case with Transsion. Even though it is a Chinese company, it has never been sold in China or in the United States, and since its first mobile phone was released in 2007, each of its phones has been first released in the African market and aimed at African consumers.

You may think this is no big deal, but in fact, market positioning can change many parts of the product shape. Let’s talk about some details:

Four-Cards Four-Standby

Seven years ago, Tecno launched a best-selling mobile phone. At that time, both the Chinese market and the US market were snapping up iPhone, but what African users wanted was a phone that could plug in four SIM cards.

You already know that dual-cards dual-standby, this function means that a mobile phone can insert two SIM cards, and both numbers can be dialed.

For a long time, mobile phone manufacturers in Europe and the United States did not understand the significance of this feature.

In Nigeria, there were five telecom operators at that time. The mobile phone numbers of the five telecom operators incur an extra charge when they call each other. To this end, many local users have to carry 3-4 SIM cards at the same time to ensure that they enjoy discounts when calling different people.

According to market research firm Informa, mobile phone users in Nigeria have an average of 2.39 SIM cards.

Transsion discovered this from the beginning, because a similar situation occurred in the early Chinese market. Their first mobile phone supported dual-cards dual-standby, and it has developed into four-cards and four-standby.

Photo function that is friendly to people of color

With the advent of the mobile Internet era, all users begin to take pictures with their mobile phones. Big technology companies have invented beauty features and various filters. Almost all of these phones or Apps, try to make the user’s face whiter. This is fine for others, but it may be offensive to people of color.

Transsion realized this. In all TECNO Mobile phones, its beauty features and filters don’t simply make the face whiter, but brighten the face while retaining its original skin tone and give more detail to a black or brown complexion.

via Tecno Mobile

Apple and Google have been trying to improve this algorithm for the past two years, but TECNO did it in a simpler way many years ago. To some extent, it is “reverse racial discrimination”, which does not take into account the results of white users using these filters, which allows them to focus more on optimizing the black user experience.

The company’s phones are also better at facial recognition for Africans. In June 2020, the company’s research team won the title of the Dark Complexion Portrait Segmentation Challenge in the “Look Into Person” competition hosted by CVPR2020, a top conference in the field of computer vision.

Acid-resistant shell

With the exception of the three-proof mobile phones for the military and outdoor enthusiasts, few mobile phones pay special attention to the durability of the shell material in daily use.

But many parts of Africa are located in the tropics, with only summer in the year. This means that the phone will have more contact with the user’s sweat. The PH value of human sweat is between 4.5 and 5.5, which means it is a weak acid. Ordinary mobile phones are exposed to sweat for a long time, which can lead to faster damage.

TECNO Mobile’s phones are shipped with an acid-proof coating that can resist the corrosion of liquids with a PH value of 3.5. This not only increases the durability of the phone, but also makes the accuracy of fingerprint recognition function does not decline with time.

The above example is not an advertisement for the company, but just to illustrate how a mobile phone that focuses on the African market at the product development level will be different from other brands.

Users in Europe and the United States will cheer the details announced by Tim Cook on the Cupertino stage, and Chinese users will be moved by the new features released by Lei Jun at the National Convention Center. Similarly, Transsion tries to mine features and designs that are “very useful” only to African users.

It’s hard to imagine Apple or Samsung launching such a product, because many of these features are unnecessary in other markets, but they incur huge costs.

For Transsion, however, details that other mobile phone brands cannot do have become the secret of their success in this land.

Of course, in theory, a company that has such an insight into the local market should also be a local company.

But Transsion is a Chinese company that translates China’s advantages in supply chain and manufacturing into its own advantages. It can produce high-quality mobile phones that cannot be made in other countries at very low prices.

In 2018, the average price of its non-smartphone products was about $10, while the average price of smartphones was $70.

Other mobile phone brands are either unable to keep costs so low or produce durable phones at such low prices.

Why did Transsion choose the African market?

After reading this, you may still have a question: why a Chinese company chooses Africa as its “hometown”. (not even a second hometown).

Zhu Zhaojiang, founder of Transsion, did not start the company from scratch. Before starting the business, he was a senior executive at Ningbo Bird, another well-known mobile phone brand in China in the last century, responsible for overseas sales of Ningbo Bird Phone.

Zhu Zhaojiang, founder of Transsion Holdings

Founded in 1992, Ningbo Bird initially gained market by selling cheap pagers on Chinese mainland.  Later, it began to produce mobile phones, and despite its once-successful success, it showed signs of fatigue in 2006.

Since then, the communications company, which originated in the small Chinese city Ningbo, has gradually lost out to its formidable competitors-Nokia, Sony, Motorola, OPPO and VIVO.

It was at that point that Zhu Zhaojiang left Ningbo Bird, to start Transsion and chose to create the first mobile phone brand in Africa, TECNO Mobile.

For the mobile industry, it was a period of bottleneck-it was still two years before the release of a cross-era iPhone, and phones without smart capabilities became increasingly saturated in mature markets such as the US, China, Japan and South Korea.

Many of Bird’s competitors have begun trying to sell phones in markets where communications infrastructure is still inadequate, but they have chosen Southeast Asia. Because compared with Africa, although the construction of mobile communication infrastructure in Southeast Asian countries is still not perfect, it can still support a certain scale of the market.

But Zhu Zhaojiang doesn’t think so.

During his tenure as Bird’s overseas sales director, he traveled to 90 different countries to conduct market research, and he believes that the broadest market is in Africa, although there is still no cell phone signal in most of the region.

In 2006, Ethiopia had a population of nearly 100m, but only 700000 mobile phone users, and a SIM card traded for more than $100 on the black market. But by 2012, Ethiopia had more than 20 million mobile phone users, a 30-fold increase.

The problem of mobile network infrastructure was also quickly resolved in Africa as ZTE and Huawei began to enter the market and offered preferential construction options.

Today, Africa is still a potential mobile phone market with a population of 1.286 billion and a population growth rate of nearly 3%. The mobile phone penetration rate here was only 44 per cent in 2018, and many people compare the African mobile phone market with China 15 years ago.

This was somewhat lucky because Zhu Zhaojiang did not know that two years after he founded Transsion, Apple would bring about a smartphone revolution.

The smartphone revolution has divided the global mobile phone market into two parts, one is the “most immature market”, and the other is “enough to support the smartphone” market.

In a market strong enough to support smartphones, there has been fierce competition, and many of the former giants that beat Ningbo Bird (such as Nokia and BlackBerry) have not survived.

In the former, as mentioned earlier in this article, people are still using non-smartphones, which means that Transsion can provide African consumers with cheaper and cheaper phones year after year without spending too much on research and development.

In 2007, TECNO Mobile launched its first mobile phone in Nigeria, which ranks second in Africa’s economy. This is a phone sold only to the African market, which quickly made TECNO Mobile the most important player on the continent.

Every year that followed, Transsion became more successful.

In the face of competition, it is trying to become Apple

A mobile phone manufacturer that sells cheap, high-quality but technologically outdated phones to the African market is clearly not enough to be called “the Apple of Africa”.

In fact, this model has also been challenged in the past few years.

Thanks to Moore’s Law, the smartphone industry has finally brought its costs down. Although Apple and Samsung are still releasing flagship smartphones worth more than $1000, cheap smartphones priced at $100 have become available.

As a result, competition in the African market has become very fierce in the past few years, which is affected by several important factors.

First of all, Africa’s communications infrastructure has made a “overtaking” progress with the help of Chinese companies. Although many cities in the United States still do not cover 5G signals, they already have 5G signals in many parts of Africa. As a result, African users quickly lose interest in non-smartphone.

Second, Africa’s homegrown manufacturing industry is developing, and they are producing mobile phones that are “completely dependent on themselves”. For example, Mara Group, from Rwanda launched its first Android phone made in Africa in October 2019. Although Transsion has always stressed its strategy of making Africa the primary market, it comes from China after all.

Finally, as the company is trying to cope with changes in the market, it has increased its investment in research and development, putting pressure on the company’s cash flow.

So, how does it face the changes in the market? It began to imitate Apple, profiting from services, not just phones.

Transsion started making smartphones, but it has taken some action to make sure it gives users an experience that other Android phones don’t have.

To put it simply, it has launched several Apps for the African market, and has formed a good interaction between these App.

The most successful of these is Boomplay, which was released in 2015. You can think of it as a Spotify for the African market.

Its caching function is more powerful than Spotify, which makes it have a better performance in the African market. Through contracts with Universal Music, Warner Music and other companies, this App has a media library of 40 million songs in Africa. By July 2020, Boomplay had 95 million users.

In 2018, one of Transsion’s subsidiaries released their second App VSKIT. This time, they made a Tiktok for the African market. The product now has more than 40 million users, which is a very good result given the high cost of data traffic in Africa.

The company also has a news client called MORE News, which like News Break, is a news reader that algorithmically determines the content to be displayed. This kind of reader is very popular in China, and Bytedance, the parent company of TikTok, started their business with one of these readers.

In addition, the company has launched a mobile payment business in Nigeria and Ghana, PalmPay, which is more like China’s Alipay or WeChat Pay than crude Apple Pay. Users can use it to transfer money, pay offline stores, shop online, charge mobile phones, and so on.

These Apps belong to Transsnet, a joint venture between Transsion and NetEase. NetEase is the second largest gaming company in China and one of the most important Internet companies in China, known for its music business. This ensures the quality of these App.

As you can see, these products are not very innovative, and they are accustomed to the American or Chinese market. But in the African market, these are still very new.

Transsion is not simply copying these App to the African market, trying to repeat the secret of its success-redesigning these existing products from the perspective of African users.

Through the ecosystem built by these App, Transsion will gain more advantages over its competitors.

If it succeeds, it will become a well-deserved Apple of African.

Leave a Reply

%d bloggers like this: