Editor: Some Things about the Internet (imyixieshi)
Source: Zinc Finance (xincaijing)
Author: Sun Pengyue
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After completing the strategy of the United States, the European market, India and southeast Asian markets, domestic mobile phone manufacturers have set their sights on the continent farthest from China: South America.
In February this year, according to the Argentine media "Página12" reported that Xiaomi will open its first Millet Home in Argentina and will build a factory in tierra del Fuego in southern Argentina to produce mobile phones, and the total investment of Xiaomi is expected to reach millions of dollars.
The South American market has always been one of the fastest growing regions in the Xiaomi global market, according to Canalys data: in the whole of 2021, Xiaomi ranked third in the South American smartphone market with a market share of 12%, an increase of 94% year-on-year; among them, it ranked first in Colombia and second in Peru.
In Peru, Xiaomi has beaten Apple to become the largest smartphone maker in Peru; in Colombia, it also occupies about 30% of the market share, ranking second; and in Brazil, the most populous and economically developed in South America, Xiaomi's mobile phones are currently activated by 10,000 units per day.
(Sao Paulo, Brazil, Xiaomi Home)
Xiaomi company related staff told Zinc Finance: The total population of South America exceeds 600 million, and it has always had a very high strategic position in Xiaomi's global market strategy. On the one hand, Xiaomi maintains a very high annual growth rate in the South American market, on the other hand, the South American market itself is also a very potential market.
Among them, there are two characteristics that are very conducive to mobile phone sales: the first is that the population structure is young, and consumers' interest and demand for digital products is strong; the second is that many South American countries are still in the process of rapid expansion of 4G and 5G networks, and the number of mobile phone users and internet users is also continuing to grow. This provides a broad space for the development of mobile phone brands around the world, including Xiaomi.
In addition to Xiaomi, Huawei, Lenovo, OPPO, vivo are actively deploying markets in South American countries, from online e-commerce platforms to offline brand direct stores, and the LOGO of domestic mobile phone brands is spread throughout the streets and alleys of South American countries.
After fighting the key battles in the European and Southeast Asian markets, South America has now become the focus of global mobile phone manufacturers.
1
Argentina loves "Lenovo"
Argentina is the second largest country in South America, with a total population of 45 million, the third largest GDP in South America, and the consumption potential of the people is large. The large population and high consumption level are perfectly in line with the soil for the development of the mobile phone market.
In the Argentine mobile phone market, there is a very "difficult to understand" hard and hard rule: "In order to support the domestic manufacturing industry, all mobile phone manufacturers sold in Argentina must ship parts to Argentina for assembly." ”
This also means that if you want to sell mobile phones in Argentina, you must fly 20,000 kilometers of smart phone parts from China, India and Southeast Asia, and then transport them by land through the Patagonian wasteland, through the strait, and finally send them to the Argentine factory for assembly.
Such harsh conditions made Apple directly abandon the Argentine market.
(Lenovo moto x30)
After Apple withdrew from Argentina, it ushered in the carnival of the Android camp. At present, the first mobile phone market share in Argentina is Lenovo's Motorola. This brand, which is almost silent in the Chinese market, has become a giant with more than 40% of the market share in Argentina.
It is understood that the most important factor for Motorola to become an industry leader in Argentina is Lenovo's supply chain capabilities. As early as 2011, Lenovo cooperated with the Argentine Newsan Group to spend $14 million to build a factory on tierra del Fuego in Argentina. The Newsan Group, the largest company in the field of consumer electronics in Argentina, is a complete "ground snake".
Before being acquired by Lenovo, Motorola was already a well-known communication operator in Argentina, with a number of communication patented technologies from 2G, CDMA, TDMA, to 3G, iDEN and so on.
In 2014, after Motorola was acquired by Lenovo, Lenovo quickly "localized" it, proposed a "vertical integration" strategy, abandoned the practice of outsourcing production capacity to foundries such as Foxconn and Compal, and cooperated with the Argentine local manufacturer Newsan Group to establish subsidiaries and establish exclusive factories.
When other mobile phone brands are still far away, across the strait to Argentina to assemble mobile phones, Motorola has achieved 100% localization production, completing the advantages of origin and the advantages of production models.
With the support of Lenovo's supply chain, Samsung, which originally occupied 60% of the Argentine market, has gradually lost, making Motorola the absolute hegemon of the Argentine market.
2
Why Argentina?
With the exception of the Indian factory, where labor is cheap, Xiaomi has not yet established a production base overseas. Xiaomi told Zinc Finance that the South American market has always been an important market for Xiaomi, which entered the first stop in Mexico in 2017, Colombia in 2018 and Peru in 2019. In terms of time, compared to the European and Southeast Asian markets, it is not that long.
However, according to Xiaomi's official disclosure to Zinc Finance, xiaomi is currently in these countries, in addition to Xiaomi Home, has cooperated with mainstream dealers. For example, in Peru, Xiaomi has established a cooperative relationship with Claro, a subsidiary of American Telecom, to ship through telecom operator channels, and there are also local e-commerce platforms such as MercadoLibre and Linio in e-commerce channels to provide shipping channels for Xiaomi.
In Mexico, TekMovil is an important official agent of Xiaomi; in Chile, operator Entel is Xiaomi's main partner; in Central America, Xiaomi has worked with operators Tigo, Claro, and intcomex.
Looking at the whole of South America, Argentina is bound to be a market that cannot be ignored.
In addition to the "hard requirements" of Mobile Phone Manufacturers mentioned above, Argentina's tax exemption policy is also one of the important reasons for the attention of mobile phone brands.
Since 2017, Argentina has focused on reducing tariffs on imported goods, with the intention of opening up its markets to attract foreign investment. Tax reduction categories have also gradually expanded, not only consumer electronics, but also many crops also have corresponding tax reduction measures. Even by October 2018, Argentina had reduced tariffs on more than 100 consumer electronics.
In addition to reducing tariffs on consumer electronics, the stability and safety of the Argentine market is also the best choice for the whole of South America.
Many countries in South America have unclear political situations and frequent violent incidents, and the only countries that are relatively stable and capable of supporting the construction of industrial chains of mobile phone manufacturers are Brazil and Argentina. Although Brazil does not have the "mandatory requirements" of Argentina, it is not a "good to get along with" object.
For example, the protection of manufacturing and the production and transportation costs in the Brazilian market, and the high tax rate on imported electronic equipment to promote manufacturers to achieve local production, will lead to excessive costs of local labor and accessories.
In addition, Brazilian taxation is even more frightening, and it is understood that there are currently 104 types of taxes levied by the Brazilian federal, state and municipal governments.
Even if the mobile phone manufacturer chooses to assemble the mobile phone and transport it, there are transportation costs, customs review, and layers of applications. Not only will it put a huge burden on costs, but it will also affect the release time of new machines. At a time when the performance of smart phone hardware is so fierce, the flagship model is listed a few months late, which is difficult for any mobile phone manufacturer to bear.
Therefore, building factories in South America is the best way to solve the above problems.
(Tierra del Fuego, Argentina)
This time, argentine media reported that the place where Xiaomi chose to build a factory is called "Tierra del Fuego", which is a special free zone in Argentina, the same as China's Hainan Island, and Antarctica across the sea.
Choosing a true sense of "the end of the world", of course, is not conducive to manufacturing and transportation costs. But Argentina due to the weak industrial base, so the Argentine government wants to bring manufacturing companies together to build Tierra del Fuego into a manufacturing powerhouse, at present, Tierra del Fuego has a number of mobile phone manufacturers settled, including ZTE, Lenovo.
Based on Argentina, and then radiation Brazil, Colombia and other countries, from the perspective of production and transportation, it is a great benefit to mobile phone manufacturers.
3
South American mobile phone market
The South American mobile phone market continues to heat up, and any mobile phone manufacturer is reluctant to give up the cake of more than 600 million people.
As an early market giant for smart phones, Apple Samsung has been monopolizing more than 80% of the South American mobile phone market. However, with the gradual development of domestic mobile phone manufacturers, Chinese manufacturers occupy 5 of the top eight mobile phone brands in the market.
The first pioneer to enter the South American market was Huawei in 2013. In order to avoid the exploitation of Brazilian taxes, Huawei announced the establishment of its Argentina branch as its headquarters in South America, and by 2021, Huawei Argentina has more than 500 employees.
Since 2015, Huawei has cooperated with companies such as New San, BGH, and Brightstar in Argentina to produce 650,000 smartphones, and in 2016, production increased to 2 million. Huawei once became the third-selling brand in South America with the help of its production line in Argentina.
However, as the US sanctions on Huawei have been tightened year by year, Huawei's market share has continued to decline, and by the end of 2021, Huawei has fallen out of the top eight positions in the market. The glory of separating from Huawei last year, in order to make up for the market gap left by Huawei, will also enter the South American market.
According to a report by Counterpoint Research, the South American smartphone market is gradually heating up, with at least five new brands entering the market in 2021; of which the first market share is Samsung, and the second to seventh places are: Motorola, Xiaomi, ZTE, oppo, Apple, VIVO.
(Source: Counterpoint Research)
With the completion of domestic mobile phone manufacturers to Asia, Europe, South America will become the next flashpoint.
In the face of the protection of their own electronic products by various countries in South America, the production and transportation are obstacles to domestic mobile phone manufacturers. The establishment of subsidiaries and joint venture factories in cooperation with local foundries has become the best choice.
Huawei and Lenovo have taken the first step, and brands such as OPPO, vivo, and honor will also carefully consider the possibility of building factories in South America.
END