Image source @ Visual China
Highlights:
1. Xiang Hailong recently joined Transsion Holdings. The Internet veteran has shouldered the heavy responsibility of increasing revenue of the "Transsion Internet business", but the revenue of the business currently accounts for less than 1%.
2, the life of transsion mobile phones in Africa is not good. Domestic mainstream manufacturers have seized the market, TRANSSION has no advantage in technology and marketing, and the "first-mover advantage" accumulated before is also failing.
3, Africa is still the world of functional machines and low-end smart machines, users pay more attention to low-cost products, coupled with backward infrastructure construction, can not support complex applications, Xiang Hailong will face an incomparably difficult market.
After leaving Baidu, Xiang Hailong's professional resume has become rich.
First he started his own business, then served as the CEO of Gome Online, and recently joined TRANSSION Holdings with the old department of Baidu as the president of the mobile Internet business unit.
The intention is very obvious - to shoulder the heavy responsibility of increasing the revenue of transsion Internet business, but this is not an easy task.
Transsion Holdings, known as the "King of African Mobile Phones", has its main markets in Africa and Southeast Asia, and its domestic business is basically zero. The Internet business, which it will focus on, currently accounts for less than 1% of the company's revenue. On the other hand, Xiang Hailong, although he had a bright personal resume before, his work experience was mainly in China, and he was almost not involved in overseas markets.
After the introduction of Xiang Hailong, transsion holdings, which is bent on change, can it really effectively reverse the revenue structure and change the current situation of hardware revenue before?
The voice is full of dangers: the money of the African people is not easy to earn
Transsion Holdings is a mobile phone manufacturer going to sea. As early as 2020, TRANSSION ranked fourth in the global mobile phone sales rankings, with 174 million mobile phone shipments and a global market share of 10.6%. It is particularly noteworthy that in the African market, TRANSSION smartphone shipments account for up to 40%, accounting for nearly half of the market share in more than 50 regions in Africa.
Therefore, Transsion is also known as the "King of African Mobile Phones". But for Transsion, although the name of "the king of African mobile phones" is loud, it is actually full of deep meaning behind it.
At present, the average price of transsion mobile phones is about 500 yuan, mainly functional machines and low-end smart machines. Due to the restrictions on the consumption level of residents, local residents in Africa are more inclined to choose such price point products, but with the increase in consumption levels, demand has begun to shift to higher-end smartphone products.
At that time, xiaomi, OPPO, vivo and other high-end domestic mobile phone brands became competitors of TRANSSION.
According to IDC data, in the first quarter of 2021, the first place in the African smart phone market was TRANSSION Holdings, but with the entry of xiaomi, OPPO and other manufacturers into the African market, transsion's "cake" has been eaten away a lot.
Outside of Africa, TRANSSION is also expanding into emerging markets such as South Asia and South America, but compared with the African market, these regions are currently more competitive and their business expansion is not smooth.
Many industry insiders believe that compared with these domestic mainstream mobile phone manufacturers, TRANSSION is in a weak position in terms of technology research and development and user scale.
Song Changlai, a senior observer in the mobile phone industry, said bluntly that transsion mainly relied on product positioning and market differentiation in the early stage, and entered the African market in advance, which was a great success. But now the industry competition is intensifying, transsion's product core technology is low, lack of long-term moat, early methods and strategies to open the African market are also failing in other markets.
The data just happens to prove it. Taking R&D investment as an example, its R&D investment in 2020 was about 1.158 billion yuan, although it increased by 43.80% year-on-year, but the proportion of operating income was only 3.06%; in the first half of 2021, transsion holdings R&D investment was 640 million yuan, an increase of 50.72% over the same period of the previous year, but the total R&D investment accounted for only 2.8% of operating income.
In addition, due to the current competition in the low-end mobile phone market gradually saturated, low prices have become a common choice for everyone, which directly restricts the improvement of the profitability of TRANSSION.
According to the 2021 semi-annual report, transsion's net interest rate is only 7.6%. And because of the impact of rising raw material prices and chip shortages, the gross profit margin in Q2 of 2021 also fell from 31% in 2019 to 21%.
"Transsion only rely on hardware to make money is not a long-term solution, but also need to learn from domestic mobile phone manufacturers, quickly expand other new business revenue models", Song Changlai said, now the mobile phone has become an important carrier and entrance to the development of mobile Internet, around the smart phone to create hardware, application ecology, in-depth consumer life business model, in the country has become commonplace, the future of TRANSSION only to build their own ecosystem and brand power, in order to get more business opportunities.
A new journey to the sea dragon: facing an extremely difficult market
In fact, in addition to mobile phone hardware, TRANSSION also provides some software and services.
In terms of mobile Internet services, as of the end of the first half of last year, TRANSSION had more than 10 independent or cooperatively developed apps with more than 10 million monthly active users. Previously, TRANSSION Holdings had put forward the mobile Internet business as a "new driving force for the company's performance growth", with the intention of launching a new business direction and broadening the company's ecological boundaries.
But unfortunately, transsion's current Revenue on the Internet is still very low.
Taking the first half of 2021 as an example, TRANSSION Holdings achieved operating income of 22.853 billion yuan, of which the total revenue of mobile phone business was 21.677 billion yuan, accounting for nearly 95%. This also means that the commercial ecological model of "mobile phone + mobile Internet service + home appliances and digital accessories" promoted by Transsion Holdings to the outside world is still only the establishment of mobile phone business, and the revenue of the two major businesses of mobile Internet service + home appliances and digital accessories accounts for only about 5%.
According to Cinda Securities data, in the third quarter of 2021, the revenue of transsion holdings' mobile Internet business in Africa and other regions was about 130 million yuan, accounting for less than 1% of the total revenue in the quarter.
Under the strong enemy of the mobile phone business, the revenue of developing emerging businesses such as mobile Internet services has become the focus of TRANSSION Holdings' current efforts. This is also the reason for the introduction of Xiang Hailong.
It is reported that after joining Xiang Hailong, he will serve as the president of the mobile Internet Business Department of TRANSSION Holdings and shoulder the heavy responsibility of increasing the income of TRANSSION Internet business. This also means that Xiang Hailong will become the core personnel driving the new driving force for the performance growth of Transsion Holdings.
But can Xiang Hailong be competent for this job? Question marks still need to be placed.
Judging from Xiang Hailong's professional resume, he founded Shanghai Qilang Network Technology Co., Ltd. in 2001 and served as the general manager, becoming the general agent of Baidu bidding ranking in Shanghai; in 2005, after Baidu acquired Shanghai Qilang, Xiang Hailong and the original Qilang team officially joined Baidu, and then took charge of Baidu's bidding ranking business.
In April 2016, with the establishment of Baidu Search, Xiang Hailong became the president of the new company, took charge of the core commercialization system of Baidu, which contributes more than 70% of its revenue every year, and directly reported to Robin Li, who also reached the most brilliant moment of his life and career.
But then, due to Baidu's failure in the mobile Internet, Baidu ushered in its first quarterly loss since its listing, and Xiang Hailong immediately resigned as senior vice president of Baidu and resigned from Baidu.
At that time, there were media reports that Xiang Hailong's departure from Baidu was a "passive departure". After leaving Baidu, Xiang Hailong also stated that his next step is entrepreneurship and investment. However, the entrepreneurial boom was not long, and he joined Gome as ceo of Gome Online, responsible for businesses including Gome e-commerce App True Happiness. In July 2021, due to the poor performance of True Happiness, Xiang Hailong once again left Gome.
This time, Xiang Hailong once again ushered in a new journey of his personal career, but new challenges and problems also followed.
"Xiang Hailong's experience is mainly in the domestic Internet market, and the market for TRANSSION is mainly in Africa, Southeast Asia and other places, and there may be challenges in adapting to new positions." And before that, he also lost when he joined Gome," some insiders commented.
Another industry insider said that the introduction of Xiang Hailong is essentially to increase Internet revenue faster, but Africa is still the world of functional machines and low-end smart machines, users pay more attention to low prices, coupled with backward infrastructure construction, it is impossible to support complex applications, accustomed to domestic commercial realization of Xiang Hailong, facing a difficult market.