Breaking
December 12, 2024

Alarm bells ring for ‘smartphone king of Africa’ as other Chinese brands chase crown Chris Mendez | usagoldmines.com

It is called the “smartphone king of Africa” and for years has dominated the continent’s cell phone market. However now, Shenzhen-based Transsion Holdings is dealing with some stiff competitors from rival Chinese language manufacturers.

Transsion is the corporate behind phone brands together with Tecno, iTel and Infinix, which gained over African clients with options corresponding to multi-SIM performance and reasonably priced value factors. By 2021, Transsion’s manufacturers managed half the continent’s cellphone market share.

However now manufacturers together with Xiaomi and Realme are consuming into that share.

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Within the third quarter of 2024, Transsion’s web earnings attributable to shareholders dropped by 41 per cent 12 months on 12 months to 1.05 billion yuan (US$144 million). In the identical interval, year-on-year income fell 7.2 per cent to 16.7 billion yuan. Transsion put the decline largely right down to the mixed impression of “market competitors and provide chain prices”.

The agency, which made its fortune promoting its telephones completely in Africa earlier than increasing to different markets, has additionally been hit by rising element prices, particularly memory chips.

Amid challenges from significantly from Xiaomi and Realme within the mid-to-low value section, Transsion noticed handset gross sales fall by 17 per cent 12 months on 12 months within the third quarter, in response to knowledge from Hong Kong-based Counterpoint Analysis.

Transsion has needed to battle in opposition to rivals corresponding to Xiaomi in Africa, significantly within the low-mid sector. Picture: EPA-EFE alt=Transsion has needed to battle in opposition to rivals corresponding to Xiaomi in Africa, significantly within the low-mid sector. Picture: EPA-EFE>

When it comes to African market share, China’s Xiaomi, Realme and Honor all noticed an increase within the third quarter, whereas Transsion’s market share fell from 47.5 per cent final 12 months to 41.2 per cent within the third quarter of this 12 months, in response to Counterpoint’s figures that are primarily based on sell-through numbers – or gross sales quantity by native retailers. And although Transsion’s flagship model Tecno grew its market share from 25.7 per cent final 12 months to 27 per cent, Infinix and iTel each noticed their market shares drop.

“If competitors in rising markets intensifies sooner or later and the trade’s total gross revenue margin declines … the corporate may even face the danger of a decline in market place and gross revenue margin, which is able to result in a danger of a decline within the firm’s total profitability,” Transsion was quoted as saying by Sina Company’s media unit Sina Finance.

In distinction, Hong Kong-listed Xiaomi noticed third quarter gross sales develop 46 per cent 12 months on 12 months, in response to Wang Yang, a senior analyst at Counterpoint Analysis. Xiaomi had aggressively entered the market with widening product availability and high-value 5G merchandise, Wang mentioned.

Shenzhen-based Realme, which started in 2018 as a sub-brand of Dongguan-based Oppo Mobiles, grew its gross sales by 90 per cent 12 months on 12 months.

Gross sales grew additionally for Korean electronics large Samsung, which is the second-largest-selling cellphone model in Africa, with a year-on-year improve of 9 per cent, due to efficiency throughout its mid-range A collection telephones, in response to Wang.

George Mbuthia, a Kenya-based senior analysis analyst for Worldwide Knowledge Company (IDC), famous that the whole African smartphone market grew 11 per cent 12 months on 12 months within the third quarter of 2024.

In contrast to Counterpoint, IDC’s figures are primarily based on sell-in numbers – or shipments on the distributor degree. They confirmed Transsion sustaining its market dominance with an 8.3 per cent year-on-year development within the third quarter.

However one factor that has affected the entire manufacturers is the rise in element prices – although that is hurting Transsion, with its lower-priced merchandise, greater than others.

“The scenario has harm Transsion essentially the most since its price base is extra susceptible to massive swings in element costs,” Wang mentioned.

He defined that geopolitical tensions had precipitated disruptions in uncooked materials provide and logistics. Large losses by memory chipmakers final 12 months additionally led to corporations reducing manufacturing capability to defend pricing.

“With the market rebound, and along with a spike in demand from knowledge centres, reminiscence chipmakers have been sluggish to ramp up their manufacturing, but the smartphone provide chains are having to compete on pricing for restricted provide with gamers with even deeper pockets, corresponding to in AI knowledge centres,” Wang mentioned.

Mbuthia mentioned rising element prices had been only one a part of a broader set of challenges.

Economic circumstances, together with taxation and forex fluctuations, affect the efficiency of those manufacturers,” Mbuthia mentioned.

Moses Kemibaro, founder and chief government of Dotsavvy, a Kenyan digital enterprise company, mentioned the semiconductor scarcity, together with increased costs for shows, batteries and processors, had elevated manufacturing prices throughout the board.

“For Transsion, which depends closely on affordability to drive gross sales, this has created a big problem,” he mentioned. “Transsion operates in a section the place even a small value improve can deter consumers.”

This text initially appeared within the South China Morning Post (SCMP), essentially the most authoritative voice reporting on China and Asia for greater than a century. For extra SCMP tales, please discover the SCMP app or go to the SCMP’s Facebook and Twitter pages. Copyright © 2024 South China Morning Publish Publishers Ltd. All rights reserved.

Copyright (c) 2024. South China Morning Publish Publishers Ltd. All rights reserved.

 

This articles is written by : Nermeen Nabil Khear Abdelmalak

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