In 2008, Transsion Holdings sold its first mobile device in Nigeria. Within a decade, the Chinese company, which has virtually zero name recognition inside China, had expanded across Africa. In 2017, it overtook Samsung as the continent’s number one mobile phone supplier.
Who’s behind Transsion?
After spending the early 2000s globe-trotting for the overseas business arm of Chinese mobile phone maker Ningbo Bird, Transsion founder Zhu Zhaojiang broke out on his own. He opened Transsion’s first office in Lagos in 2008, and setting his sights on Sub-Saharan Africa, planned to sell millions of phones catering to the African market.
“In the past, firms that did business in Africa and South Asia did not spend too much on research and development (R&D), but in fact, emerging markets require more R&D efforts,” Zhu told Global Times, China’s state-owned national daily.
More than a decade later, Transsion operates three brands from its headquarters in Shenzhen in China: Infinix, Itel, and Tecno. Collectively, they represent the bestselling mobile phones on the African continent — on both basic so-called feature phones and smartphones. Transsion recorded over 40% of smartphone sales in Africa in the last quarter of 2019, according to research firm IDC. For the past three years, Transsion has led Africa in market share.
Now listed on China’s tech-focused STAR Market, Transsion raised over $400 million during its September 2019 IPO. Its current market cap stands at just over $7 billion. The market cap for mobile giant Xiaomi, the world’s leading budget smartphone producer, is $39 billion.
How did they do it?
Transsion’s ethos is rooted in a business strategy called “glocalization,” the creation of products that will sell universally but can be customized to specific markets or regions. In the case of smartphone manufacturing, Transsion has been lauded for paying attention to which features African consumers want in their devices.
Most mobile-savvy Africans know that in order to avoid network fees and get the best connectivity in low-coverage areas, they need more than one SIM card — but most can’t afford two different phones. Transsion solved that problem by selling dual SIM card phones in 2008, two years before competitors like Nokia began to. Today, some Transsion phones even include a four-SIM feature.
One feature that set Tecno apart was its camera, which had been developed for better exposure on darker skin tones. Transsion invested heavily in R&D for this project, analyzing several million photos of dark-skinned Africans and surveying the exposure and color temperature settings of local users. Ultimately, it synthesized these preferences into the design of its own camera.
In Ethiopia, Tecno became the first major phone brand in the country to offer a keyboard in Amharic, the country’s native script. This unlocked an entirely new customer base. Swahili and Hausa keyboards have also been added to Transsion devices.
And, of course, they’re cheap.
Transsion’s feature phones are currently sold for as little as $20.
In Sub-Saharan African countries such as Kenya, Ghana, and Ethiopia, an entry-level mobile phone on average costs 69% of a person’s monthly income, according to a 2019 report from mobile network trade association GSMA. In the poorest 20% of the population in those same countries, that percentage skyrockets to almost three times what a person makes in a month. The cost of a phone matters.
In order to keep its prices low, Transsion bypassed costly additions like palm-sized touch screens, multiple-lens cameras, and advanced computing power. In place of full-fledged smartphones, Transsion sold feature phones, which still allow users to text, call, and access apps like Facebook and use Opera’s internet browser, even though they don’t have access to third-party app stores and other options normally associated with iOS or Android.
“Transsion focused on this cheap model first and then moved to smartphone manufacturing gradually, spreading their influence in the rural regions,” said Louis Liu, an analyst at the market research firm Canalys. Cornering this low-end market early established Tecno and Itel as household names.
Among the top 10 mobile phones sold in Africa in August 2019, the last date available, Transsion brands held eight spots. Itel’s IT1406 was the cheapest phone on the list at a $35 retail price. Its closest competitor, Huawei, was selling its Y6 Pro for $101.
Today, Transsion also outperforms its early rivals in the low-cost feature phone space, including Nokia. The Finnish company, which has been selling phones in Africa since the mid-1990s, once ruled the market in the 2000s but ranks second in feature phone shares across Africa as of 2019, with 10% of units, according to IDC. Transsion now controls more than two-thirds of the market.
Are they stopping with Africa?
Not quite. In 2019, Transsion started expanding its manufacturing operations in Pakistan, Bangladesh, and India.
“[Transsion] is a success story,” said Ramazan Yavuz, a senior mobile market research manager at IDC. “For a very region-driven brand that has been successful in Africa, I think their efforts in the Indian subcontinent are a replication effort.”
India in particular will be a test of Transsion’s ability to apply its glocalization strategy to a bigger and more competitive environment. The country buys more premium smartphones than the African markets where Transsion operates, and device makers like Oppo, Huawei, and Xiaomi have spent years earning their Indian market shares. But India is the second largest smartphone market in the world after China, and there may still be room to compete in the “ultra-low-end” bracket.