Unknown Chinese companies are succeeding where Western companies have given up
Smart phones can't be something for poor Africans, reasoned Western companies. Chinese Transsion thought differently and is succeeding in Africa.
Today, the company is behind almost half of all smart phones sold on the continent.
Transsion is a company from the technology city of Shenzhen in southern China that started doing business in 2006. In contrast to its competitors, the company ignored its own large home market and instead set its sights on Africa. There, Transsion sold its first smart phone ten years ago.
Since then, the company's Tecno, Infinix and Itel brands have become huge successes. Last year, 95 million phones left the company's factories, an increase of 31 percent compared to the year before.
In recent years, Transsion has been behind almost half of all smart phones sold in Africa.
Younger generations are said to be delighted with what they get for their money. Especially as many of Transsion's smart phones cost less than SEK 1,000. The company is now present in over 70 countries and is growing rapidly in the Middle East, India, Pakistan, Bangladesh and Latin America. Time Magazine has placed the company among the world's 100 most influential people this year.
Transsion is just one example of how Chinese upstarts in everything from electric cars and wind power to phones and fashion are growing and challenging established Western companies. The new competition does not take place as before in the West or in China, but in developing countries with fast-growing economies, what is usually called the global south.
To the five billion inhabitants of these nations, Chinese companies today sell the equivalent of 8,000 billion kroner - more than to Western consumers - after quadrupling sales in eight years.
The new Chinese expansion is accelerated by the tariff walls in the West. The US and Europe were for a long time active proponents of globalization and free trade. But since they began to protect themselves with tariffs against Chinese competition – most recently with tariff walls on Chinese electric cars that are considered unfairly state subsidized – China has changed its focus. And discovered that it works well to sell solar panels, electric cars and wind turbines to the global south as well.
When the West closes its gates, Chinese companies just move on to other parts of the world. All facilitated by China's mega-project New Silk Road, which led to gigantic investments in infrastructure and diplomatic warmth.
In Zahid Mehmood's store in the low-budget China Mall outside Johannesburg in South Africa, it becomes clear what globalization means for poor consumers.
First, they want smart phones. Nokia released early cheap phones with long battery life and room for dual SIM cards. Many Africans still remember them as their first telephones. But then Nokia, like other established brands, forgot to develop smart phones for poor Africans.
Lucky then that there are Chinese phones with a touch screen for between 150 and 800 kroner.
- A Tecno for SEK 800 is perfectly fine. It has good battery life and a 48 megapixel camera. In many respects it is as good as a Samsung, says Zahid Mehmood.
- And Chinese manufacturers send spare parts in large quantities, and these are cheap. It is also very important to our customers.
Chinese companies first produced clever pirated copies of phones and cars with repeated errors. Today, they master manufacturing with good quality at a fraction of what Western premium brands cost.
When it comes to the development of batteries and electric cars, China is even at the forefront. Last year, Infinix managed to develop a fast charging technology that meant a model could be charged to 25 percent in one minute. And be fully charged in less than eight minutes.
What the Chinese companies are doing is turning to a large group of residents with low incomes in new markets in the world - customers that Western companies rarely care about.
If the current trend holds, by 2030, according to The Economist, they are estimated to sell a greater value of goods to the Global South than European companies do, and to have caught up with the American ones.
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