mentions Transsion Holdings (688036.sh). Many domestic consumers must be unfamiliar with this company. However, this Chinese company, with its brands tecno, itel and infinix, plays an important role in the African market and is known as " King of Africa”.
Red Star Capital Bureau noticed that Transsion Holdings recently released its 2023 performance report. It is reported that in 2023, Transsion sold more than 94 million smartphones, with a total revenue of 62.392 billion yuan, a year-on-year increase of 33.9%; operating profit increased by 122.55% year-on-year, reaching 6.748 billion yuan.
With this sales volume, Transsion has become the fifth largest mobile phone manufacturer in the world, and this "King of Africa" from China has attracted widespread market attention.
Data map Picture according to Visual China
(1)
entered the top five in the world for the first time
In recent years, the global smartphone market has continued to be cold, and industry dividends have gradually disappeared. Against this background, the shipments of mobile phone manufacturers have also continued to decline. Not only are small and medium-sized enterprises struggling to develop, but life for leading companies in the industry is also difficult.
By 2023, the winter for the global smartphone industry will be even colder.
According to data from the research organization IDC, global smartphone shipments will decline by 3.2% year-on-year in 2023, totaling 1.17 billion units, which is the lowest record in ten years.
Major mobile phone manufacturers will also face major challenges in terms of shipments in 2023. The shipments of Samsung, Xiaomi, and Oppo, which ranked second, third, and fourth in terms of shipments in 2023, fell by 13.6%, 4.7%, and 9.9% respectively year-on-year. Although Apple, which ranks first, has achieved positive growth, its annual shipment growth is only 3.7%.
On the other hand, Transsion's global mobile phone shipments reached 94.9 million units in 2023, a year-on-year increase of 30.8%. It is the only manufacturer among the top 5 in the shipment list to achieve double-digit year-on-year growth. At the same time, this is Transsion Ranked among the top five smartphone manufacturers in the world for the first time.
Obviously, 2023 will undoubtedly be a "bumper" year for Transsion.
It is worth mentioning that on January 27 this year, according to the "Shanghai Securities News", Transsion issued the "Notice on Transsion Holdings' 2023 Year-end Bonus Distribution Methods." The notice shows that based on the company's overall operating performance exceeding the budget in 2023 and having a higher year-on-year growth, the company's management has determined that the company's performance coefficient is 1.3, that is, all employees will receive an additional 30% year-end bonus on the basis of normal accounting year-end bonuses.
As for the reasons for the performance growth, Transsion said that the company continued to explore emerging markets and promote product upgrades, and overall shipments and sales revenue increased; at the same time, benefiting from product structure upgrades and cost optimization, the overall gross profit margin increased. The corresponding gross profit increased.
(2)
How the "King of Africa" was born
As a Chinese company, how did Transsion sell its products to Africa and continue to expand the market to become the fifth largest company in the world?
Transsion was founded in 2006. Its founder, Zhu Zhaojiang, once worked for Bird Mobile.
In 2008, Transsion positioned itself in Africa and launched its brand strategy. The reason for choosing Africa is also very simple. The local population is large but the penetration rate of mobile phones is low.
According to the "2006-2007 African Telecommunications Market Research Report" provided by Shuiqingmuhua Research Center, the local mobile phone penetration rate at that time was only about 9.4%.
Since then, Transsion launched a mobile phone brand called tecno in Africa, and later launched itel, which focuses on cost-effectiveness, and infinix, which focuses on young users.
By 2015, according to IDC data, Transsion’s mobile phone sales had become the second in Africa, second only to Samsung. By 2017, Transsion has become the “King of Mobile Phones” in Africa, with a market share of 45.12%. According to the latest data from
, Transsion's shipments in Africa will reach 34.5 million units in 2023, with a market share of 50%, a year-on-year increase of 8%; while Samsung ranks second, with shipments of 17.7 million units and a market share of 26 %, down 12% year-on-year. It can be seen that Transsion is in an absolute leading position in the African market.
Why Transsion can win so successfully in the African market, we first need to start with Transsion’s localization.
Zhu Zhaojiang once said in an interview with the media: "African consumers have different habits from Chinese consumers. If a mobile phone is manufactured with the characteristics of treating Chinese consumers, it will definitely not work in the African market."
Transsion has launched a four-SIM mobile phone for the African market, and a music mobile phone with large headphones as a random gift. These products have hit the pain points of African consumers, so sales are good.
At the same time, due to the relatively backward economic level of Africa, In order to seize the market, Transsion has been attracting local consumers with low prices and high cost performance. The average price of its feature phones fluctuates around 60 yuan, while the average price of smartphones is less than 500 yuan.
Overall It is said that the reason why Transsion has become the "King of Africa" is that on the one hand, the company has done a good job in localization of products, and on the other hand, the price is close to the people and has high cost performance.
However, the lower price also makes the company's products more popular. Cost fluctuations are more sensitive, and the overall ability to resist risks is lower.
(3)
is eager to go out of Africa.
After its great success in Africa, Transsion also wants to copy this strategy to more regions.
Public information shows that in 2015, Transsion decided to go deep into Southeast Asia and South Asia. In January 2015, Transsion entered Indonesia; in April 2016, Transsion officially announced its entry into India; in July 2017, it entered Bangladesh, and in September it was Nepal; at the same time, Transsion Transsion’s mobile phone products have achieved high market share in Africa, South Asia and other markets, and have been sold in emerging market countries such as Ethiopia, India, and Bangladesh. Building its own factories, it has established a global layout for cross-border operations in Africa, South Asia, Southeast Asia, the Middle East and Latin America.
At the same time, according to canalys data, also in the second quarter of 2023, Transsion's share of the Latin American market has reached Fourth. In addition to Africa, Transsion has also become the largest mobile phone manufacturer in markets such as the Philippines, Pakistan, and Bangladesh. Before 2019, the African market contributed more than 75% of Transsion’s revenue, and in the first half of this year, This number has been reduced to less than 40%.
As for India, the world's most populous country, it has always been a battleground for all companies. Counterpoint research data shows that the Indian smartphone market will drop by 2% in 2023 (fiscal year 2023), ranking among the top five in market share The famous brands are: Samsung (18%), vivo (17%), Xiaomi (15%), realme (12%), oppo (10%).
Among them, Transsion will occupy the Indian smartphone market in total in fiscal year 2022 6.3% share, which has increased to 8.6% in fiscal year 2023.
In addition to the mobile phone business, Transsion has also expanded its digital accessories, home appliances, mobile apps and other businesses, hoping to open up the second growth curve.
Currently Transsion has Launched the digital accessories brand oraimo and the home appliance brand syinix, as well as a variety of apps including boomplay, vskit, scooper, palmpal, and aha game.
Like mobile phones, most of Transsion's accessories and home appliances focus on high cost performance. However, the penetration rate of home appliances in Africa is low. It remains to be seen whether this part of the business can become the company's second revenue curve in the future.
(4) How
responds to market competition
Although Transsion has carved its own path in the global market through differentiation, the market still has concerns about the future development of the company.
On the one hand, its business in the African market, its base, is approaching its ceiling. On the other hand, in emerging markets such as Asia and Latin America, Transsion needs to face the attack of long-established domestic competitors such as Xiaomi, Oppo, and Vivo.
From the perspective of R&D investment, Transsion’s investment in R&D has indeed been increasing since its launch.
’s financial report shows that from 2020 to 2022, Transsion’s R&D investment was 1.158 billion yuan, 1.511 billion yuan, and 2.078 billion yuan respectively, increasing year by year. In the first three quarters of 2023, R&D investment reached 1.691 billion yuan, a year-on-year increase of 189 million yuan.
However, compared with corporate giants, Transsion’s R&D investment still lags far behind.
's financial report shows that Xiaomi's R&D investment in 2022 will be 16 billion yuan, and it is expected that total R&D in five years (2022-2026) will reach more than 100 billion yuan. Huawei's R&D investment in 2022 will be approximately 161.5 billion yuan, and vivo's R&D investment in 2022 will also exceed 10 billion yuan.
On the other hand, Chuanyin’s research and development expenses in 2022 will be 2.078 billion yuan, accounting for 4.46% of total revenue.In the case of insufficient investment in R&D, the market may worry about the core competitiveness of the company's later products. After all, the current market competition is fierce, and technological innovation can help companies open up the market and become the core moat of the company.
In this regard, Transsion also stated in its 2023 semi-annual report: The technology update cycle of the mobile phone industry is constantly shortening, which places higher requirements on the R&D strength and market response speed of companies in the industry. The application of a new technology or the release of a new product may set off a new consumer trend and have a very significant impact on the market competition pattern of mobile phone products. If the company cannot continue to invest R&D resources, constantly update technology, and respond quickly to the market in the fields of new material research, technological innovation, process innovation, etc. in the future, it will lead to a decline in the company's product sales.
Summary
In general, in 2023, when the global mobile phone industry is "whining", Transsion has become a "lucky one". But this is no accident. It benefits from the company's reasonable layout in terms of differentiated competition and market investment.
However, at the same time, technology research and development capabilities are relatively weak, market demand and consumer demand are constantly changing, and market competition is fierce, all of which have also brought more challenges to Transsion.
Red Star News reporter Liu Mi
editor Yu Dongmei
