China’s smartphone makers invade Africa

March 3, 2013

Africa is the fastest-growing mobile phone market in the world and has been described as the last frontier for the industry with the promise of unlocked riches attracting Chinese handset makers in droves. The battle for the smartphone market in Africa is largely between Chinese manufacturers like Huawei and ZTE battling well known market leaders like Blackberry, Samsung, Nokia, LG and Apple. Fixed line telephone networks in Africa are weak and building new ones is very expensive. This means that smartphones will remain the number one option for the African continent population to connect to the Web that could bolster the economic growth. Consumers in Africa are going after smartphones that allow them to Tweet, post on Facebook and watch video while on the move.The challenge for Chinese smartphone makers is to offer those features at prices local populations in most poor African countries can afford. Africa consumers are now leapfrogging basic phone models are now purchasing smartphones although the prices have not come down as expected. People in most countries in Africa are going straight to the mobile Internet and that has seen demand for Chinese phone rise significantly.  Majority of people in African are focusing on low-price smartphones and that will likely step up the challenge to market leaders Nokia, a popular brand with middle aged population in Africa and Samsung which is the new darling of young mobile phone owners in Africa, which are two best known for their top-end brands in African markets.

Huawei and ZTE have built their market share by bringing features pioneered by iPhone such as touch screens, fast processors and better cameras to the African markets at price range of between US$80 -$100. The two companies are expanding into African countries in a bid to appeal to the rising middle classes there that are considered as the main consumer group in the continent. The opportunities in African market appear huge because only 4% of Africans had smartphones in 2012 according to latest research. Africa is expected to be the fastest growing region, with mobile connections growing at a compound annual rate of over 6.5%. Chinese manufacturers will need to build a very strong relationship with the carriers to get a subsidy and also sell in the open market to capture the main markets from Samsung, Nokia and Blackberry. The appeal of a smartphone largely comes down to its upfront cost, which Chinese companies have comfortably demonstrated the ability surpass the technical specifications of the market leaders. This has proved to be a headache for Nokia and Samsung in the African market.In my opinion, Chinese companies need to find enough volume for African market to sustain the volumes they need and luckily for them they have enough money they need to keep pushing for business growth in the continent. Manufacturers like Huawei and ZTE have been working tirelessly to shake off their ‘copycat’ and ‘fake phones’ reputations notoriety they have acquired in Africa by introducing marketing slogans and top-end devices in the continent. Such a bruising battle for the market can only translate to benefits for consumers in Africa. I foresee a trend where mobile network operators in Africa will start introducing top end devices subsidies that will hide the cost over a one or two year contract to fight off competition from Chinese manufacturers who are poised to take over the smartphone market in the continent.

 

Contador Harrison